When individuals divorce generally new estate planning is necessary to ensure that the changed circumstances and divorce decisions are reflected in the revised documents.
Under Maryland law, a spouse, even if not named in estate planning documents and assuming no pre-nup or similar agreement exists, has a legal right to part of the other spouse’s assets on death (a statutory spousal share) until the divorce judgment is signed by a judge.
Frequently, during previous estate planning as a married couple the now former spouse is named in existing estate planning documents as the other spouse’s agent and/or testamentary beneficiary. Although, Maryland law automatically revokes these former spouse designations, the lack of backup agents/beneficiaries may make the legal revocation ineffective. If a divorced individual desires to retain a former spouse as the former spouse’s agent or beneficiary, problems are mitigated if new estate planning documents are “re-executed” after the divorce is legally finalized. Query, do you desire that your former spouse manage your assets or make healthcare decisions for you?
As a corollary, if a former spouse is named as a beneficiary in retirement plans or life insurance policies, to avoid unintended results changing beneficiaries may be desired. Under Maryland law, divorce does not automatically legally serve the above described spousal designations.
Sometimes a divorce judgement or a martial settlement agreement may or may not change or otherwise impact existing estate planning documents; however, under any circumstances, estate planning documents should be reviewed, if not revised after a divorce.
Note, generally, real property deeds require additional, separate legal action to implement either mutual decisions of the divorced individuals and/or judicial decisions.
Further, spousal legal rights and obligations towards children are only partially addressed by custody and child support arrangements. Also, after a divorce, possible child guardianship issues should also be addressed/readdressed in estate documents.
In addition, among other federal and state tax issues, tax issues regarding which spouse is authorized to take child tax credits and which spouse and to what extent is responsible for tax liability issues from filing jointly may need to be addressed.
If a divorced individual is considering remarriage, creating a pre-nuptial agreement before the re-marriage may be beneficial to clarify how new, potentially “competing,” interests should be handled.
Additionally, with “blended families”- i.e.- with spouses who have children from previous marriages – executing estate planning documents clearly stating mutual spousal decisions mitigates against possible future family conflicts.
If desired, contact us to help you make informed estate planning decisions and to address any other related issues.