Think through the impact of your divorce on your estate plan, so that the two pieces work seamlessly together, instead of being at odds with each other.
Many times, people come into divorce with an estate plan that never addressed the potential for the marriage to come to an end before the death of one partner. Actually, the estate plan usually does address the potential for divorce, but it does so in “boilerplate” language, and the parties are often unaware of the impact. Estate planning lawyers do not typically talk about the possibility of divorce with the parties. In fact they often assume that if their clients were to divorce, their job would be to help the higher-earning or moneyed spouse cut the lower-earning spouse out of the estate.
Good estate planning for high net worth individuals and families often involves the use of trusts to avoid probate or minimize the taxable estate. For married people, these trusts almost always deal with the possibility of divorce, and yet in the hundreds of cases I have had involving a trust, not one person knew what the trust provided for in the event of divorce.
Some estate plans essentially act, in part, as postnuptial agreements, dividing and dictating the handling of assets in the event of divorce. Estate planning attorneys are not obliged to discuss those provisions with the parties together, as they would be if the issue at hand was a pre-nup or a post-nup.
I have had a number of cases where a significant portion of the marital assets have been transferred into a trust to avoid probate. The husband is often the grantor or creator of the trust and the wife is a beneficiary or trustee or both and is defined as a person “married to and living with the husband.” By the time they come to see me to figure out the terms of their divorce, they have actually separated in order to ease the tensions of their personal lives. Under the terms of the trust, which often owns a significant portion of their marital estate, the wife is no longer a beneficiary because she is no longer living with the husband.
It takes a tremendous amount of legal work, time and expense to undo such a clever plan because the possibility of divorce was never discussed.