Estate Planning and the Ex-Spouse
I recently read a great blog post from my Wealth Counsel colleague in Colorado, Martha Hartney. The blog post was a fictional letter from one ex-spouse to the other regarding estate planning for their children. I was so impressed by Martha’s thoughts I wanted to pass along a few here, as well as a few of my own. I believe these tips are helpful for all parents, but can be especially important where there has been a divorce:
- Make sure beneficiary designations are up to date. DO NOT name minor children as beneficiaries as it will require a conservatorship and everything will go to them outright at age 18. DO NOT compound the mistake by naming your estate – this will require a probate on top of the conservatorship. DO create proper trusts with the trust as beneficiary. A living trust can be a beneficiary for life insurance and a retirement plan legacy trust can be the beneficiary for retirement accounts.
- Don’t leave assets to the children outright. Use a living trust and other proper trusts so that probate and conservatorships can be avoided and the children don’t receive control before they are ready. Additionally, any assets that pass directly to your children will in most cases, absent a trust, be under the control of your ex-spouse until the children reach 18.
- Name a trustee that your ex-spouse can work with. Your trustee will have to deal with your ex-spouse. If bad blood already exists between the trustee you are considering and your ex-spouse don’t place your children in that situation. Work to find someone who would work well with your ex.
- Work together on naming guardians in the event you both pass. Nothing could be worse for your children than to lose both parents only to be thrown into a legal battle between competing individuals who have been nominated as guardian by the respective parent. Work together on this one!
- If you re-marry have a pre-nuptial agreement that protects your children. If you re-marry your new spouse will, by law, have certain automatic rights to your estate unless waived. Don’t take chances - get an agreement.
While the marriage may have ended, the co-parenting obligations continue. Take the time to consider what happens when you pass. How do you want your children to inherit your estate? Who do you want to be in control?