Exes, Stepchildren, and Your Willpower: A Cautionary Tale

More than half of marriages in the United States end in divorce, and for most, it’s one of the most horrific experiences of their lives. So when the lawyer hands over the final divorce papers, the last thing on either ex-spouse’s mind is updating their estate plan. However, failure to do so could lead to a real “mess”.

What happens when an estate plan is not updated

Bob and Mary married in 1993. Mary had a daughter, Jane, from a previous marriage. Even though Bob never officially adopted Jane, he treated Jane as if she were his daughter throughout the marriage. The joint trust referred to Jane as “the settlors’ only living child” and named her the beneficiary of the remainder. These terms have an important meaning under the law, and ignoring them following a divorce can be a real problem.

Bob and Mary divorced in April 2019 and Bob passed away a few months later. As is often the case when a couple divorces, they have not updated their estate planning documents to reflect their change in marital status. Did Bob still want Jane to inherit after the divorce? We’ll never know, but his estate plan speaks for itself. He may have only wanted Jane to benefit if he remained married to Mary.

After Bob’s death, Mary acknowledged that she was no longer a beneficiary of the joint trust under California law (see discussion below) due to the divorce. Nonetheless, Jane sued, arguing that the divorce did not revoke Bob’s legacy to her. Stepchildren often don’t see divorced spouses as the end of their relationship with the stepparent, especially emotionally, but the law is mixed, as we’ll see below.

Legal precedents for exes and legacies

In California, as in many states, once a divorce decree is granted by the court, certain bequests and appointments relating to the surviving spouse are automatically revoked. For example, CA §5040 probate code provides that certain transfers without probate (e.g., through revocable living trusts, individual retirement accounts (IRAs), and other retirement vehicles, such as pensions and 401(k), transfer upon death, and payment upon death designations made before or during marriage) are automatically revoked upon entry of a divorce decree.

In particular, designations of beneficiaries of life insurance policies and irrevocable trusts are not automatically revoked.

The CA probate code is silent on whether gifts to stepchildren are voided by a divorce when the document was signed before the divorce. But California case law gives guidance on how gifts to former stepchildren are treated:

  • In Hermon Estatethe Court of Appeal clarified that “when a testator provides for the children of his spouse, he normally intends to exclude the children of a former spouse after the dissolution, unless a contrary intention is stated elsewhere in his will.
  • And in Estate of Jonesthe Court of Appeals expanded the aforementioned rule, stating that the court could go beyond the instrument to find evidence of the deceased former step-parent’s continuing relationship with the child after the divorce to determine if the deceased former step-parent probably wanted the gift to go to the child.

As stated earlier, just because the wife and husband legally divorce does not mean that the emotional attachment or relationship of the step-parent with the step-son will end. So, if the estate planning documents are not amended to clarify whether the stepchild(ren) are no longer inheriting, it should come as no surprise if the stepchild “lawyers” and tries to get a share. of action. If the estate is large enough, there is no shortage of real estate litigation lawyers only too happy to take on a case like this for a percentage of the recoupment.

Lessons to be learned

If you’re about to get divorced, updating your estate plan is probably the last thing you want to focus on, but it’s crucial that you do. Although non-probationary transfers to ex-spouses may be automatically terminated by law in certain circumstances, keep in mind that these can always be legally challenged by the ex-spouse or son-in-law or son-in-laws. children. Additionally, non-probationary transfers to ex-spouses through an irrevocable trust, such as the typical Dynasty Trust and Irrevocable Life Insurance Trust (ILIT), are not automatically revoked upon divorce, unless the document trust does not explicitly state this.

If your current estate plan makes bequests to the children or other family members of your future spouse, you should review these documents and amend them either to revoke the gift or to specifically state your intention to support them. needs after divorce. Otherwise, upon death, your assets may be distributed in a way you had not anticipated.

Note that each state has laws like California and the laws are constantly changing. So, no matter where you live, we recommend that you consult your estate planning lawyer to effectively protect yourself and the disposition of your assets in the event of a divorce.

Managing Partner, Jeffrey M. Verdon Law Group, LLP

Jeffrey M. Verdon, Esq. is the managing partner of the Jeffrey M. Verdon Law Group, LLPa trusts and estates law firm located in Newport Beach, California. With over 30 years of experience in designing and implementing comprehensive estate planning and asset protection structures, the law firm helps affluent families and successful business owners solve their toughest problems. complex and most complex. contrarian aims and objectives with respect to estate tax, income tax and asset protection.

About the author