Estate Planning When Contemplating Divorce

Once a divorce is final, your former spouse, and relatives of your former spouse, are generally not entitled to inherit any money from you upon your death. But what should you do during the lengthy time of your separation leading up to your divorce?

Ripping up a Will that gave everything to your surviving spouse does not solve your problems. New Jersey’s newest probate law (N.J.S.A. 3B:5-3), enacted in 2005, states that you are married and die without a Will a large portion of your assets, possibly all your assets, will pass to your surviving spouse. Accordingly, if you die before your divorce is final, your surviving spouse may still be entitled to all your assets (marital and non-marital). Additionally, your surviving spouse will be entitled to be the Administrator of your estate. This may be completely contrary to your real wishes.

If you do not want the person you are divorcing to receive all your assets, creating a new Will gives you greater control over where your assets go and allows you to pick your own Executor.

When drafting a new Will, keep in mind that any persons that you name under your Will to act as trustee or guardian for your children might be affected by your divorce. Accordingly, if you name a relative of your former spouse as a trustee, he or she may be ineligible to serve as a trustee of any trusts for your children unless clear instructions are given. You should also revisit your guardianship designations to make sure they are still appropriate given your current circumstances.

However, even with a new Will, you usually cannot completely cut out your spouse. Depending upon how far along you are in the process of your divorce, New Jersey’s Elective Share Statute may allow your surviving spouse to claim up to 1/3 of your estate. However, even if your surviving spouse is unable to collect his or her elective share, the Court may intervene if it thinks it would be inequitable to completely cut out your surviving spouse. In 1990, the New Jersey Supreme Court utilized its equitable powers to grant a surviving spouse an equitable share of the marital assets.

In addition to writing a new Will, to further protect yourself, your divorce attorney should consider provisions in your separation agreement whereby you and your spouse waive your right to claim the elective share of your spouse. Your divorce attorney may also wish to consider submitting a motion to the Court to prevent your spouse from making beneficiary changes to his or her life insurance, retirement plans and educational savings accounts.

Finally, do not forget to speak with your parents and siblings about their estate planning documents. If they have money passing to your spouse under the terms of their Wills, or if you or your spouse is named as a guardian, they may wish to update their Wills as well.