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Estate Planning & Divorce
Their Paths Do Cross
By: Bruce Stout, Esq.
The unpleasant reality is that divorce is a common occurrence in our society. Members of the family law bar skillfully guide their clients through the intricacies of that event. However, the client's new status as a single person and its impact on their estate planning is rarely addressed. The reason is simple - very few practitioners do both family law and estate planning. However, as this article will make clear, the consequences of a mistake are far too great for a family law attorney not to initiate the estate planning discussion and make the necessary changes or refer their client to a member of the estate planning bar.
Since June 5, 1992, West Virginia has provided that a divorce does not revoke a will, but instead only revokes dispositive and fiduciary provisions for the former spouse. W.Va. Code � 41-1-6. That change certainly does not revoke dispositive or fiduciary positions for members of the former spouse's family. Thus currently, while a divorce is an appropriate time to review one's documents, at least once the divorce is finalized, the former spouse cannot take over the will. Recognize, however, that divorces finalized prior to June 5, 1992 still revoke the will in its entirety. Foy v. County Commission, 442 S.E.2d 726 (W.Va. 1994).
Next, more clients are using a revocable trust rather than a will as the primary vehicle to transfer their wealth at death. However, the same result of the spouse not taking or being permitted to serve as a fiduciary occurs under a will or revocable trust because of recently enacted W.Va. 44D-1-112. Do not forget that the disposition of the whole range of nonprobate assets, other than a revocable trust, is unaffected by divorce. Many of our clients have most of their wealth in life insurance, retirement plans, property jointly held with right of survivorship, annuities and life estates. Unless specifically dealt with in the divorce decree, the former spouse who was named the beneficiary would remain so. There is no law automatically revoking beneficiary designations upon divorce and arguments hoping to find a constructive trust may not prevail. Stated simply, divorce is an event requiring the time and cost of a new will or revocable trust.
The estate planner should determine whether alimony or child support payments extend beyond death. If so, provisions must be included in the client's plan to accommodate these issues.
Durable powers of attorney, both financial and medical, which commonly name the spouse as agent, should be reviewed. Most clients would be troubled to learn that their former spouse could still make financial decisions for them while the grant of a final divorce decree automatically revokes the designation of a former spouse to act as agent under a durable medical power of attorney. W.Va. Code � 16-30-18 (c).
When remarriage is contemplated, other issues must be considered. At this point, a prenuptial agreement, and the requirements to ensure validity, is often a welcome topic for the divorced client considering remarriage. Prenuptial agreements should deal at a minimum with distribution of the estate in the event of death and divorce. The requirements to ensure validity, namely, full disclosure of assets (also arguably expected inheritance, gifts and current income), independent counsel and whether the agreement is unconscionable should be reviewed meticulously. Ware v. Ware: 687 SE2d 382 (W.Va. 2009). The client should be made to understand the intricacies and impact of the elective share as revised in 1992.
While a marriage after June 5, 1992 does not revoke a will, the potential impact of a pretermitted spouse means a new will should be considered. W.Va. Code �42-3-7 is applicable when a will is executed prior to the marriage. If the new spouse is not provided for and the beneficiaries are someone other than the testator's descendants, then the new spouse can take theirr intestate share. Since such share is determined without consideration of the length of the marriage, the result may be very different than what was intended by the testator. For example, assume that a client without children executed a will distributing his assets to siblings or their descendants and charities. He then marries, and a short time later he dies without making a new will. Who takes? Since the new wife qualifies as a pretermitted spouse under W.Va. Code �42-3-7 and her intestate share would equal the entire net probate estate, she would be the sole heir to the exclusion of the named beneficiaries. This result could have been avoided with a will executed after the marriage.
Divorce and remarriage are events that should compel family law and estate planning lawyers to advise a client to consider who they want managing their assets in the event of incapacity and who they want to eventually receive their property. |
