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.