I just got back from a trip to the beach where there were back-to-back weddings near the ocean. So many new brides and grooms!
Are you planning to get married or divorced in the near future? How will that affect your estate plan?
An estate plan has lots of pieces and moving parts, but let’s start with how marriage and divorce affect the basic legal documents you should have in your estate plan.
WHAT HAPPENS TO MY OLD WILL?
If you marry after signing a will and you have not specifically stated in the document that you are executing the will in anticipation of a future marriage, that will signed previous to marriage will not be valid. If you then die without executing a new will, you will die intestate and the rules of the state of Georgia will control distribution of your assets. That means that if you have a wife and children, your new spouse will share the assets in your probate estate with your children. Here is a link to my blog What happens if you die without a will in Georgia?
If you have married since your last will was signed, you should do a new one as soon as possible.
WHAT HAPPENS TO MY WILL IF I DIVORCE?
If you divorce, your will is still valid, but the law presumes you did not want to leave anything to your ex-spouse and the probate assets will be distributed as if your ex had predeceased you. The other provisions in your will - such as nominating guardians for minor children - will remain intact. If you wish to leave anything to an ex-spouse, a will executed after divorce will be valid as to any provisions made for the ex-spouse.
HOW ABOUT MY LIVING TRUST?
The same rules will apply to a living trust, so if marrying or divorcing, you will want to sign a new trust or an amendment to your trust following marriage or divorce.
A POWER OF ATTORNEY:
In Georgia, a divorce does not automatically invalidate a Power of Attorney (POA), so if you have named your spouse as your agent under a POA and you no longer want that spouse to serve as your agent, you will want to have a new POA prepared and executed before or after your divorce. If you marry, your spouse does not automatically have the ability to serve as your POA, so you will need to have a POA prepared if you wish to nominate a spouse.
ADVANCE DIRECTIVE FOR HEALTHCARE:
If you have nominated your spouse to make healthcare decisions for you under an Advance Directive for healthcare, that designation is automatically revoked upon divorce or annulment, so you will want to have a new advance directive prepared in the case of divorce. Marriage also revokes nominations of your agent under Advance Directive for Healthcare, so you will need to prepare a new Advance Directive if you get married.
BENEFICIARY DESIGNATIONS are not affected by marriage or divorce, and the beneficiary designations on the accounts will control distributions. For example, if you have your spouse as the beneficiary of your life insurance and you get a divorce, if you die before changing the beneficiary your ex-spouse will receive the benefits of your life insurance policy. Check out this article on “Check Your Beneficiary Designations”.
RETIREMENT ACCOUNTS
Of course, most people divorcing will split up their assets during the divorce proceeding, and retirement accounts are generally divided in a divorce. Retirement assets may be different from other assets, in that when a distribution is made there will be taxes due potentially making the retirement account worth less than a non-taxable account.
401(k) Retirement accounts are generally split through a qualified domestic relations order QDRO, which is an order issued by a judge. Roth and Traditional IRAs are divided as a transfer incident to divorce. The receiving spouse can roll over the part of the account received in their divorce settlement, but will be required to pay taxes on the distribution when they take money out of the account. In addition, if the receiving spouse takes distributions early – before they reach age 591/2, there may be additional taxes due as a penalty for the early withdrawal.
If you die before changing beneficiary designations on a retirement account, the beneficiary you have named will be entitled to receive the proceeds of your retirement account.
REAL PROPERTY
You will also need to check the deeds to your real properties. If you marry, your spouse does not automatically have ownership rights to the property (but see the article on Petition for Year’s Support) and if you wish to give them an ownership right, you will want to transfer an ownership interest via a new deed. Similarly, if you divorce and your ex-spouse still has an ownership interest as stated in a deed, you will need to make sure your deeds reflect what, if any, ownership interests the ex-spouse retains in real property.
A PRE-NUPTIAL AGREEMENT can address many of the estate planning issues, so if you intend to leave your estate to someone other than a spouse, it would be a good idea to address it before marriage. A pre-nup can address property and assets you own before the marriage, but can also address property acquired after marriage.
WHAT IS A PETITION FOR YEAR’S SUPPORT AND HOW COULD THAT AFFECT MY ESTATE PLAN?
One area that the pre-nuptial agreement should address is whether a surviving spouse can file a Petition for Year’s Support after your death, seeking to have property awarded for his or her benefit, or for the benefit of minor children. Here is a link to an article on Petition for Year’s Support.
If you or someone you know is recently married or divorced, or planning to be married or divorced, feel free to call our office to discuss planning your estate (770) 416-0776.
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