Estate Planning and Divorce
During a divorce, most people focus on the immediate issues such as child custody and asset division; they are not thinking about estate planning or other issues that may crop up far in the future. However, estate planning is an imperative issue to consider during divorce proceedings, especially since divorce can unilaterally change certain aspects of your will, trust or retirement plans. A knowledgeable attorney can be of great help in determining what documents you need to modify going forward, and how to do so.
Wills and Trusts
Wills and trusts are the most common estate planning documents in use today, and most couples do name their spouse as the main beneficiary of their estate. Generally, under Nevada law, provisions or gifts to a former spouse are invalidated immediately upon a divorce decree being finalized, and the will handled as if the spouse had predeceased the testator. However, this can be problematic if you have a specific plan for how you want your assets to be divided upon your passing.
There are rare exceptions to this invalidation, but you must have planned for them beforehand. For example, one listed exception to the rule is that a bequest to an ex-spouse is allowed to stand if previously stipulated in a property agreement (or other agreement, such as a prenup). If you and your spouse (at the time) agree that she is entitled to retain the antique wedding ring even in the event of a divorce, that agreement will be honored unless it is unconscionable under Nevada law or unless consent to the agreement was obtained by fraud.
The other issue that many couples encounter is that of retirement accounts governed under the Employee Retirement Income Security Act (ERISA), including pension plans. Under ERISA, the administrator of your retirement plan is legally required to disburse funds to the person listed as your beneficiary, regardless of if you are divorced or not in the same situation as you once were. Unlike wills, retirement accounts under ERISA are not invalidated or changed automatically upon divorce, so it is your responsibility to contact the relevant authorities and make necessary changes.
It is important to note that contacting your plan administrator is the only way to make such a change – even provisions in your will dictating a contrary beneficiary will not be honored. It is also important to note that if you choose one of your children as a beneficiary, payment to a minor child cannot be paid directly from an ERISA-covered account. Other steps must be taken to allow transfer to a minor child.
Seek Experienced Legal Help
Estate planning is a complex and time-consuming process that is difficult to handle on your own, and especially in the context of divorce, it must be dealt with in an efficient way. The dedicated attorneys at the Kainen Law Group are happy to assist you in identifying potential pitfalls and direct you to the appropriate individuals to make sure all your assets are earmarked for the right people. Contact us today to set up an appointment.