Remarriage, Divorce, and Your Estate Plan

When we talk to families about estate planning, we hear two common concerns: (1) what happens if my spouse remarries after I am gone, and (2) what if my child gets divorced after I am gone?

            In Wyoming, if you die without a Will, your jointly held property will pass to your spouse.  All property just in your name will go one-half to your spouse and one-half to your children.  This can lead to a lot of complicated problems – your spouse may have to sell property just to pay off your children.  With a Will leaving your assets to your spouse, you can avoid these issues.  But, if you are married and you pass away, your spouse will own all property in their name.  What happens if they remarry?

            Bill and Mary had been married for 30 years.  They had two children together and enjoyed a long and happy marriage.  One day, Bill had a heart attack and unexpectedly died.  Bill and Mary had planned ahead and had Wills leaving everything to each other.  Mary moved everything into her name.  Several years went by and she met Ralph.  Eventually, Ralph proposed to Mary and she said yes.  They married.  About 10 years into the marriage, Ralph had a stroke that changed his personality for the worse.  Mary decided that she would need to divorce him.  How much of Mary and Bill’s assets is Ralph entitled to?  Since Bill and Mary planned using Wills, and Mary contributed the assets to her marriage with Ralph, he may be entitled to up to one-half.  That means one-half of Bill and Mary’s inheritance to their children may go to Ralph.  Do you think that is what Bill wanted to happen?

            What if, instead, Bill and Mary had created a joint revocable trust?  The Trust could require the survivor of them to enter into a prenuptial agreement prior to remarriage to access their marital assets.  Under this scenario, Mary would have had a great excuse to agree to a prenuptial agreement with Ralph before they got married.  The prenup would protect Bill and Mary’s life savings from Ralph and Ralph’s children.  Bill and Mary’s children would inherit their parents’ estate, instead of Ralph or Ralph’s children having a claim over it. 

            Now that we have protected Bill and Mary’s estate plan from remarriage, what about protecting it from their children’s potential future divorce?  Again, using a joint revocable trust, after Bill and Mary’s deaths, the share for their children can remain in the revocable trust, in their children’s names.  The assets are there for their children to use and enjoy without taking title to the assets in their name.  This protects the assets from their spouse having a right to the assets.

            For example, Bill and Mary’s daughter, Susan, is married to Jason.  After Bill and Mary pass away, their joint trust leaves $700,000 to Susan in the trust.  Susan has the right to invest, manage, and spend the $700,000.  If Susan leaves the money in the trust, then Jason has no rights to it.  If Susan and Jason divorce, the $700,000 is not Susan’s outright, so a divorce court has no right to award any of it to Jason.  The trust has again succeeded at carrying out Bill and Mary’s wishes and has protected their family wealth to pass to the next generation of their family.

 Have questions about estate planning? Give Lubnau Law a call at (307) 682-1313