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What Happens To My Joint Trust If I Get Divorced?

What Happens To My Joint Trust If I Get Divorced?

 

 

What Happens To My Joint Trust If I Get A Divorce?

What Happens To My Joint Trust If I Get Divorced?

              Going through a divorce can be an extremely painful, stressful and seemingly unending process.  It affects so many different aspects of your life.  This article discusses just one of the effects, which is your estate planning, including your living trust, will and power of attorney documents.

What happens to my estate plan when I get divorced?

This is a great question and one that a qualified estate planning lawyer Dardenne Prairie can assist you with.  In Missouri, a divorce essentially treats any distributions intended for your ex-spouse as void.  In other words,  you have a will, it says that when you pass everything goes to your ex-spouse, but upon finalization of the divorce, that provision for your now ex-spouse is treated as if they have predeceased you and therefore the distribution would pass to your contingent beneficiaries, which would usually be your children.

What happens if I have assets that will avoid probate, such as a life insurance policy?

The Missouri law treating the ex-spouse as a voided beneficiary only covers assets in probate.  If you had a life insurance policy that left your soon to be ex-spouse as the primary beneficiary, you would need to change that after divorce, because if you pass away, your ex-spouse would inherit.  This happens all the time, unfortunately, and that’s why it’s important to have a game plan to review your estate plan (or establish one) after your divorce is final.

The second thing to note is that any distribution to your ex-spouse upon your passing is only void if the divorce is final.  If you expect your divorce to be extended for a period of time, it’s important to meet with an estate planning attorney to make changes anyway.  Under Missouri law, you can adjust your estate plan to cut out your soon to be ex-spouse.  You can’t completely cut them out (unless you have a prenuptial agreement or postnuptial agreement), but you can ensure that they will not inherit everything, which would be the case if you did nothing and passed before your divorce was finalized.

What happens if I have a trust and am getting divorced?

That depends on the type of joint trust you have.  An irrevocable trust attorney O’Fallon, Missouri  can explain in more detail, but the terms of this type of trust cannot be changed after the trust is created, regardless of divorce.  This type of joint trust, however, is usually created by spouses to benefit their children.

If, on the other hand, you have a revocable joint trust, both spouses can retain control over the assets.  Of course, this assumes you would want to do that.  Most of the time, spouses want to dissolve their trust and distribute assets as agreed in their marital settlement agreement.  From there, you can take the safest step and create a new estate plan with your own trust, a new will and new powers of attorney.  You’d probably want to do that anyway, since your now ex-spouse is usually listed as your principal in your healthcare power of attorney and durable power of attorney documents.

Do you really want your ex-spouse making healthcare calls for you at the end of life?  Me neither.

As you can see, the best practice, at a minimum, when you are going through a divorce is to sit down and review your estate plan with an experienced estate planning attorney.

 

 

Do You Have To Change Your Estate Plan If You Move Out Of State?

Do You Have To Change Your Estate Plan If You Move Out Of State?

DO YOU HAVE TO CHANGE YOUR ESTATE PLAN IF YOU MOVE OUT OF STATE?

A common question from clients that move away from Missouri is do they need to change their estate planning that I completed for them.

The answer is probably.  Here’s why:

Each state has different laws with respect to estate taxes, trusts and many have adopted different statutes with respect to probate and inheritance generally.

Here’s an example:

I used to practice law in New Jersey, which had, at least at that time, a statute that required some beneficiaries from wills and trusts, usually farther than an immediate family member like a cousin or an uncle, to pay inheritance tax on anything received from a relative’s estate.

Attorneys draft estate plans to take to the most advantage out of weakly drafted statutes or to utilize breaks in the law.  And so we drafted wills and trusts in New Jersey that not only had provisions for that very specific inheritance law but took advantage of it where possible.

Different laws among states is not the only reason why you should amend or change your estate plan if you move away from Missouri.

Another issue is the perception by some that out of state documents are a problem.  Banks are a really good example of what I would call a “skittish acceptor” of legal documents.  Having dealt with banks (and faced repeated non-issues made into issues by them) as a probate lawyer St Peters, I can tell you that there is the way things are and the way banks what things to be.

One of the biggest problems with banks is that they no longer train their employees well enough.  As a result, any legal documents are often met with an immediate call to the “legal department”, which is almost always in another state and, as a rule, routinely denies the validity of a document.  This is often just because the bank employee couldn’t properly explain the issue to the legal department and since the default answer at legal is “no”, you might end up in a difficult situation where you have a perfectly acceptable legal document that you cannot utilize because of the bank.

So what am I saying?  Well, you could run into a problem at a bank and since you won’t find out until it’s maybe too later to fix the problem, it’s always the safer practice to update your estate when you move.

By the way, that process is relatively simple.  If you have a Missouri living trust, you’ll need to change the “governing law” provision in your trust document.  It will be Missouri and need to be changed to whatever state you have moved to.  Note that this is a relatively simple change because you’re simply amending your trust to change that one provision, not re-writing the whole thing.

Since you might be moving closer to other loved ones who might now be closer than they were before, it might make sense to add them as power of attorney, healthcare proxies, executors and trustees.

A qualified and experience estate planning lawyer where you move to can review your Missouri plan and help you pinpoint other changes, if any.

Aretha Franklin Didn’t Have An Estate Plan…

Aretha Franklin Didn’t Have An Estate Plan…

ARETHA FRANKLIN DIDN’T HAVE AN ESTATE PLAN

               Legendary singer Aretha Franklin died on August 16, 2018.  She was 76 years old and apparently died without an estate plan.

As an estate plan lawyer O’Fallon, I am surprised that Franklin, worth an estimated $80 million at her death, did not have her affairs in order.  Federal estate taxes will likely be incurred and the IRS will likely audit the estate because of the value.

The estates of celebrities can often result in years long court battles in the state where they died, among family members and non-family members alike.  I previously wrote about this type of mess with the estate of Prince, who passed away in April 2016.   His $200 million estate, over two years later, is still not settled and has been described simply as “a mess”.

https://www.legacylawmissouri.com/update-estate-prince-two-years-later/

Franklin died intestate (without a will) in Michigan, so the laws of that state will control.  She was survived by four sons, all between the ages of 48 and 63.  Under Michigan law, each of her sons should received a ¼ interest in her estate, or about $20 million.  However, these figures are subject to reduction as creditors come out of the woodwork to make claims against her estate.  Whether these claims are legitimate have to be resolved by the probate court and probate attorneys near me.  This can result in attorney fees growing and growing, as well as the basis costs of litigating these claims eating up the value of the estate.

Apparently Franklin had been advised many times by her lawyers to create an estate plan, but never did so.  “She never told me “No, I don’t want to do one.  She understood the need.  It just didn’t seem to be something she got around to” said Don Wilson, a Franklin lawyer for almost three decades.

This lack of follow through with creating a will is not uncommon.  As a will trust lawyer St. Peters, I often meet with people who state that they knew that they needed to get their affairs in order, but can’t explain what took so long.

My opinion has always been that because it’s not pleasant to think about, many people put off getting an estate plan together as long as possible.  Others are the exact opposite.  I’ve found that younger people, particularly new parents are very proactive about creating powers of attorney, naming guardians in their wills, a trust for young children and other documents to protect their family.

The other phenomenon I see though is that people learn from the mistakes of their own family.  The loss of a parent or a sibling and the mess that ensued with their estate can be a huge influence in someone getting their affairs together to avoid the same headache for their children.

 

Disinheriting A Child From Your Will…

Disinheriting A Child From Your Will…

DISINHERITING A CHILD FROM YOUR WILL

               A common misconception in estate planning is that you cannot disinherit a child from your will.  This is not true.  Unlike a spouse, who must receive at least part of your estate absent a prenuptial agreement, a child has not such protection.

There are many reasons why children are disinherited including estrangement, fear of waste, alcohol / gambling / drug addiction, lack of support from the child, abuse by the child, criminal history and prior financial support.  I once had a client disinherit their son because he robbed him.

If you are thinking about disinheriting a child from your will, there are a few considerations to think about.

The Disinheritance Must Be Clear In Your Last Will and Testament

The inheritance attorney Wentzville, Missouri will draft the document so it makes it clear at the beginning that you list your children by name, including the disinherited child.  Then in the estate distribution language portion of the document, it must be made clear that you wish to disinherit the child by name.

Make Sure Your Beneficiary Designations Are Also Changed

Often people will have a transfer on death beneficiary designation on an asset like a car.  Remember that if you left, for example, a car equally to your son and daughter, then decided to disinherit the daughter, the car is controlled by the beneficiary designation, i.e. you’d also have to remove daughter from the beneficiary designation for the car.  The simple fact that you changed the will is not sufficient.

Consider Using A Trust Instead

Often people wish to disinherit a child because they are a spendthrift and it’s assumed that any money left in a will would end up being wasted by the problem child if they were to inherit.  In such a case, a trust should be considered because you can leave money to the problem child in the trust, to be managed by another party after you pass away.  A spendthrift trust attorney St. Peters, Missouri can provide further details, but the trust can be set up so that the problem child only receives money if they avoid drug and alcohol problems, graduate from college or stay out of trouble.  This “stick and carrot” approach can be win-win for your wishes and the child and should be considered in such circumstances.

Disinheritance Is Sometimes A Practical Reality

In cases where a person has a child that they never had a relationship with, it’s important that the child be mentioned in the person’s will and still disinherited, especially in the case where the person has a new family with children that he does have a relationship with and who he or she really wants to inherit from them.

Disinheriting a child from your will is a difficult thing to do, but often necessary.  You do have options.  Consider alternative options and remember…it’s your money.

You Don’t Need To Cite The Reason For Disinheritance

In most cases I recommend that a client not explain in the document why a child is being disinherited.  I have had clients insist that the information be included, but again I believe the best practice is to not do so.

Seven Reasons To Change Your Revocable Trust…

Seven Reasons To Change Your Revocable Trust…

SEVEN REASONS TO CHANGE YOUR REVOCABLE TRUST

               Creating a revocable trust is one part of proper estate planning for the protection of your family.  However, even after creating a revocable trust, there may still be reasons to change, or amend it.

As a revocable trust lawyer Wentzville, Missouri, much of my time is not only spent with clients creating new documents but changing their existing documents.

This article discusses seven reasons to change your trust:

You Want New Beneficiaries:      Every trust must have beneficiaries to receive your stuff when you pass away.  You may want to change those beneficiaries over time.  Perhaps you want to keep the same beneficiaries, but change the distribution percentages.  Either way, you’ll need to change the trust to do so.

You’ve Moved To Another State:  If you move to a new state, your trust needs to be amended to reflect this fact and usually to change the governing law provision.  A Missouri living trust is governed by Missouri law and will state this in the document itself.  If you move to Michigan, you’ll need to change the governing law provision so that Michigan law controls.

You Had Another Child:  Having another child is a classic example of when you need to update your revocable trust.  They should be included in the document so that it’s clear they are to receive part of the trust estate when you pass.  A quick amendment can resolve this issue.

You’re Getting Divorced:  Perhaps an obvious example of when to change your trust document is when you have divorced since it was created.  Most trusts these days are joint revocable trusts created by both you and your spouse.  Since you likely left everything to the other spouse, you’ll need to amend your documents, or more likely, completely re-do them once you’re divorced.

You’re Getting Married:  On a more positive note, if you’re divorcing someone but marrying instead, you’ll likely want to update your trust so that your new spouse is at least a partial beneficiary of your revocable living trust.

You’ve Married And Now Have Stepchildren:  If you have stepchildren, they will not receive property out of your trust generally unless you have adopted them, or, otherwise, you have provided for them in your trust.  The safest bet is to amend your trust and include them in the document if that’s what you intent.

Change In Law:  New laws are created and old laws are repealed or changed all the time.  Some of these situations can greatly affect your estate planning, including your revocable trust.  Consult with an attorney to make sure that any change in laws is reflected positively in your documents.

Amending your trust in Missouri is not all that complicated.   You’ll meet with an estate planning lawyer Wentzville to discuss the changes, he or she will draft the amended documents and you’ll sign them, just as with your original documents.  The new documents will supersede the old and you’ll have an estate plan that fits your current circumstances.