Estate planning is all about protecting assets from perceived risks – sometimes referred to as “predators and creditors.”  Threats to your estate include taxes, long-term care costs, potential lawsuits, and divorce.  One statistic that is often bandied about asserts that 50 percent of first marriages end in divorce.  A divorce can impact the divorcing parties’ estate plan.  The divorce of a child can also have an impact on the estate plan of the parents of that child.    Here are five things to know about divorce and estate planning.

1. Trusts can protect assets.  A lot of my clients want to make sure that the inheritance they leave a child is protected in the event the child later divorces.  While nothing is certain when it comes to what a court may order in a divorce proceeding, leaving an inheritance to a child via a trust rather than outright is an excellent way to protect the inheritance from being subject to division in the event a child later divorces.  

2. Information about your estate plan is accessible to the spouse of your divorcing child.  Believe it or not, if your child is going through a divorce, the lawyer representing your soon to be ex-daughter- or son-in-law may issue a subpoena requesting information about your assets and copies of your estate plan documents, for which you will be required to provide that information.  In lieu of providing the information and documents requested, you can provide a so-called Vaughan Affidavit (named for the case that made this practice available to parents of a divorcing child)  that summarizes the information requested in general terms.   While a court cannot award your assets to your child or his or her spouse, the court can take into account information about your estate in deciding how to divide the couple’s assets between them.

3. In general, an inheritance is not vulnerable to claims of a prior spouse.  A bit of good news is that if your child is already divorced when he comes into his inheritance, it is unlikely that a court would award his former spouse any portion of the property or money he inherits.  Where your child is vulnerable in this regard pertains to the amount of child support or alimony he is required to pay a former spouse, especially if the ex-spouse is not self-supporting.  The best way to ensure this does not happen is to address it in the divorce agreement.

4. Your ex-spouse may still receive your IRA and your life insurance if you don’t file a change of beneficiary form.  Despite the fact that in Massachusetts a divorce terminates the interest of a former spouse with respect to beneficiary designations completed during the marriage, don’t count on that with respect to life insurance policies, IRAs, or employer retirement plans governed by federal pension law (ERISA).  If you die and your life insurance or IRA lists your former spouse as the beneficiary, your former spouse may very well be entitled to collect that money.  This is based on the fact that the beneficiary designation is a binding contract between the owner of the financial product and the insurance company that issued the policy, or the financial institution that serves as custodian of the IRA.  The best way to make sure this does not happen is to update your beneficiary designations without delay following a divorce.

5. A divorce will invalidate aspects of your Will and Trust, which you may not intend to be changed.  Massachusetts law also provides that any provision in a Will or Trust that  concerns or includes a relative of a former spouse is also revoked.  While this may be desirable in some circumstances, it is not necessarily desirable in all cases.  For example, if you and your former spouse selected her sister Janie as the best person to be guardian of your minor children should you both die, you may still want Janie as the guardian for your children even though you are no longer married to Janie’s sister.  Under Massachusetts law, this appointment would be revoked by your Will.  The best way to make sure your wishes are carried out is to meet with your estate planning attorney following a divorce to review and update your estate plan as necessary.

The bottom line is that divorce will have a significant impact on your estate plan.  If you terminate your marriage, meet with your estate planning attorney to review and update your estate plan sooner rather than later.  The best way to avoid a child’s inheritance being up for grabs in a divorce proceeding should you predecease your child is to make sure your child and his fiancée enter into a pre-nuptial agreement prior to their marriage.  If a pre-nuptial agreement is not in place and divorce is looming for your child, meet with your estate planning attorney to discuss its impact on your estate plan.

Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC.  This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.