Divorce, Part 2 of 7: Divorce Guts Your Will or Trust

If you’re like most married people, your spouse was the key to your estate plan.  You nominated your spouse to be your personal representative (the person who carries out your Will with the court).  You also left everything (or almost everything) to your spouse.

In Oregon or Washington, your divorce automatically invalidates the provisions in your Will related to your ex-spouse.  Best case, your lawyer included a back-up plan in your Will.  You are now on your second choices for what you would want to happen with your estate.

If your Will doesn’t contain a back-up plan, you might now be in the same position as if you didn’t have a Will at all.  The administration of your Will and distribution of your property would be handled by the default laws of intestacy.  Your property would be split up equally among your children or closest living relatives.

If you have minor children, you probably want to make sure that your assets would be funneled into a trust for their benefit.  The alternative would be inefficient court administration of the assets, which would then be distributed to your children when they turn 18.

You also need to choose a new personal representative to carry out your Will and a trustee if you have a testamentary trust, as well as alternates in case your first choices fall through.

Your personal representative should be someone who is responsible.  You should be able to trust this person to communicate regularly with the attorney handling the probate.  S/he should follow through on gathering your assets, dealing with your property and paying your debts.  It’s usually better to name someone who lives near you, so that s/he can more easily deal with your personal property and residence.  It’s also more convenient for meetings with the estate’s attorney and conveniently signing documents.  However, it’s possible for someone who lives far away to effectively serve as the personal representative.

The trustee of a testamentary trust should be someone who you trust implicitly.  As trustee, s/he has a legal duty to deal with your assets solely for the benefit of your children.  However, there is no court oversight of the trustee’s actions.  It’s easy for a dishonest trustee to misuse trust funds.  For that reason, it is sometimes good to name someone other than your children’s guardian as trustee.

If you have an estate plan based on a revocable living trust, divorce has probably made a mess of it.  If you have a joint trust, your spouse may still be your co-trustee.  Otherwise, in Oregon and Washington, divorce has probably effectively invalidated the provisions related to your spouse.  However, you should not rely on the default laws.  You should review and update your trust.  Like with the Will scenario above, the best case is that you have a secondary plan that comes into effect.  It is important to go back and fill in the gaps.  If you had a joint trust, you will probably need to start all over and create an individual trust.

Review your estate plan with an estate planning attorney. 

• If you don’t have a plan, you probably need one now.
• Even if you have a plan, your back-up plan is now your primary plan.  You need a new Plan B.