Articles Posted in Divorce

When a couple gets divorced, there are financial matters that need to be dealt with – in the absence of a settlement agreement, the family court must divide up the couple’s property in a way that is fair to both parties. Sometimes, this division can be tricky, especially if the marriage has been long and each person’s funds are comingled with the other person’s funds. Ultimately, the court focuses largely on marital v. non-marital property when making this calculus during a couple’s divorce.

Marital v. Non-Marital Property

In dividing a couple’s assets, the court looks at which property is marital, or community, property, and which property is non-marital, or individual, property. Each person’s income earned during the marriage, for example, is considered marital property. Importantly, the court will only divide up property that is marital.

Typically, an inheritance or gift is non-marital property. This means that if you have inherited money from your loved ones and you find yourself in the midst of a divorce, that gift will still likely be yours and yours alone. Of course, there are complicating factors to consider.

Continue reading

Having discussions with a romantic partner about a prenuptial agreement can be tough. The reality is, however, that marrying someone is, in part, a financial commitment. When talking through a possible prenup with your future spouse, it can be helpful to understand how the agreement might affect each person’s estate plan going forward. Even if you and your partner ultimately decide not to get a prenup, talking through the pros and cons can help you start to have important financial conversations that can prepare you for your future together.

What is a Prenup?

A prenup is shorthand for a prenuptial agreement. By definition, a prenup is a document that you sign with your future spouse that lays out how you would like your property to be distributed in the event of a divorce or death. Absent a prenup, a court could divide your and your spouse’s assets in a way that is not in line with either of your preferences. The court could have you pay alimony in the form of a regular payment or a lump sum, or it could determine that you are on the hook for debt that your spouse has taken on during your marriage.

Divorces can be messy and complicated, and signing a prenup before marriage allows you to bypass some of that complication in case of the worst. Importantly, you cannot prenup around child custody or child support, so those factors will always be left somewhat up to chance in the event of a divorce.

Continue reading

At McCulloch & Miller, we always advise our clients to begin their estate planning processes on the early side. The reality for many clients, however, is that life circumstances change as time goes on, which is why it is important to update your estate plan as you experience significant shifts in your life. Importantly, divorce can have implications for those who have already laid out their estate plans. If you have gone through a divorce, it is important that you speak with an estate planning attorney as soon as possible so that you can make sure your affairs are in order.

How Does Divorce Change My Estate Plans?

If you have named your spouse as the main beneficiary in your estate, he or she will likely remain the beneficiary until you actively make a change in your estate plan. Thus, even if you get divorced and no longer want your ex-spouse to be named in your will, you cannot just assume that divorcing that person will remove him or her from your estate plan. You must update your estate plan to specify which assets, if any, you would like to leave for your former spouse.

How Do I Update My Estate Plans?

To update your estate plans after a divorce, there are several things to keep in mind. First, you will want to consider revoking your previous will so that no one questions whether or not it still stands after your death. By revoking the will entirely, you can leave no room for doubt that your wishes are encapsulated in your new estate planning document.

Continue reading

A divorce is no doubt a challenging time in the lives of all who go through one. Even for the amicable splits, the time spent doing paperwork and discussing the best division of assets can be draining. Unfortunately, the issuance of a divorce decree or separation agreement is not the end of the journey. You will need to make changes to your estate plan to reflect your new circumstances and avoid regret down the road.

Do not think that changing your will is the only update you will need to make. After a divorce, any document may include your former spouse as a beneficiary. Pay special attention to your will, of course, but also consider your living trust and power of attorney documents. Also, be sure to update any life insurance policies or transfer-on-death provisions as well.

Updating Your Documents

If you’ve been through a divorce, consider revising your old will by executing a new one and destroying the old one. This will work to revoke the old will. Provisions that may need rewriting include arranging for any property previously designated for your spouse to go to an alternate beneficiary, updating the executor of your estate if it was previously your spouse, and designating a guardian of your children. Even though in all likelihood your spouse will be awarded custody of your children in the event of your death, if your wishes are for your children to live with another guardian, you should still include that language in your will.

Continue reading

Divorces are often emotionally difficult and draining—big life changes are occurring, which are stressful enough on their own. But when people are going through this process, often the last thing on their mind is updating their estate plan. However, estate planning nightmares may occur if individuals do not update their estate plans after a divorce. Former spouses and stepchildren may be able to take advantage of the estate plan if it is not changed—regardless of the person’s intentions. Below is information and advice for newly divorced Texans, explaining why updating their estate plan as soon as possible is essential.

Why Do I Need to Update My Estate Plan After My Divorce?

Estate planning may not seem like a top priority after a divorce. However, this is incorrect. While former spouses no longer have certain benefits from an estate plan—even if the estate plan is not changed—there are some designations that are not automatically revoked unless the estate plan is actively changed. For example, in Texas, unless a person actively removes their former spouse from their life insurance policy, the ex-spouse can still stand to receive the policy benefit if the individual passes away.

Creating an estate plan is an important task when thinking about the future. However, there are often mistakes that can be made if these documents are created without the assistance of an estate planning attorney. Some of these most common errors include unintentionally leaving assets to former partners or spouses after divorce or separation. There are ways to avoid these common estate planning mistakes and ensure ex-spouses are not inheriting the other person’s money. Below is advice on how to make sure assets are untangled from an estate planning perspective after a divorce—along with how professionals can assist in creating an estate plan that works for each person and their situation.

Mistakes that Allow Ex-Spouses to Inherit from an Estate Plan

Most individuals do not intend to leave their former spouses any of their assets when they pass away. However, many people are unintentionally doing so by not changing their estate plans after their divorce. People who do their research may recognize that state laws, including Texas, usually say that former spouses lose all property rights to each other’s assets. But since pensions and retirement funds are governed by federal law, these state laws may not apply.

When going through a divorce, there are many complex emotions. And of all the tasks a person must accomplish during this process, updating their estate plan is often not the first thing on the list. However, it is critically important for recently divorced people to speak with an estate planning attorney and determine the appropriate changes that should be made. Below are explanations about how divorce can affect an estate plan and what people should do and change when going through this situation.

Changing the Will

In most situations, recently divorced individuals will have to change their will because their now ex-spouse was a primary beneficiary—meaning, they were set to receive most of the assets and property owned by the individual when they pass away. While most people assume they should only change the portions of the will that mention the ex-spouse, most estate planning attorneys recommend revoking the will and drafting a new one instead. Otherwise, making a series of slight revisions to the current document will often be more expensive and time-consuming than just creating a new will altogether.

Many Texans plan for the future, including planning their estates with their spouse. Married couples may find it easier to plan together, or may enjoy picturing their life together years, maybe even decades, down the road. But, unfortunately, not every marriage survives until the end of time. Texans may find themselves in the particularly difficult situation of getting a divorce. For many, besides the emotional toll the divorce can take, there are many questions about long-term financial future and estates. What happens to the life and plans that the couple once built together? How can Texans proceed? Read on to learn about why estate planning is a critical component of the divorce process.

Estate Planning Considerations During Divorce

These questions can become increasingly complicated. When two spouses both own property or a house together, who gets to keep it? What becomes the legal status upon divorce? How can the property be divided up legally and fairly? As one can imagine, the titling of the family residence(s) can become a major legal conundrum for divorcing couples, especially those who try to handle their own divorce. But that’s not the only confusing title—other assets, such as bank accounts, also need to be reviewed and sorted out to ensure the split is clean and fair.

The Houston estate planning process can be complicated at any point during a person’s life. Generally, when relationships are altered—either in the case of a marriage or a divorce—changing the estate plan is not the first thought in a person’s mind. However, it is imperative to address the estate plan as soon as possible. Otherwise, the former partner could have legal rights if the individual becomes incapacitated or passes away before the divorce is finalized. For a lot people, this is not a pleasant thought.

Below are estate planning documents that should be altered while going through divorce proceedings:

A Last Will and Testament and Declaration of Guardians

1.29.20Blended families are almost the new normal in America. A Pew Research Center analysis shows that as many as 40% of all new marriages include at least one person who had been married before. For another comparison, in 1960, 13% of all married adults had been married before, compared to 23% today.

In a blended family, one or both spouses have at least one child from a previous marriage or relationship. Financial and legal challenges are more complicated, as are the family dynamics between parents, step-parents, siblings and step-siblings.

CNBC’s recent article, “4 ways to help blended families navigate finances,” reports that a staggering 63% of women who remarry come into blended families, with 50% of those involving stepchildren who live with the new couple, according to the National Center for Family & Marriage Research.

Contact Information