Just because you are separated and going through a divorce does not mean that you shouldn't pay attention to your estate plan. In fact, there are a set of circumstances in which the law might create a result that you expressly wanted to avoid if you do not take measures to protect yourself. I am talking about the “elective marital share”.
Separated But Not Divorced
This issue keeps coming up with clients of mine who are separate but not yet divorced. In a couple of cases, I had clients who had been separated for years with no intention of getting divorced. In a couple of other situations, because of the pandemic, the process of them getting a divorce was dramatically slowed with little relief in sight. In these situations, the individuals are in a weird no man's land – extended separation with no formal divorce insight. So what's the problem?
I have written before on the issue of updating your power of attorney, health care directives, and beneficiary statements when you get separated. Unless it is your intention to have your soon to be ex-spouse making legal and medical decisions on your behalf if you are unable to do so for yourself, you need to update these documents to reflect a new agent. And the same is true for a beneficiary or payable on death designations. Unless you want your estranged spouse to get that money if something happens to you, you need to change them. And the same goes for your Will. Chances are you had your spouse named as your executor or personal representative. Do you still want that to be the case? If not, you need to change your Will.
Elective Marital Share
Here is where it gets a bit dicey. Let's say you did change your Will to remove your spouse and update your beneficiary statements and payable on death designations. You did all that after you separated but you are not yet divorced. Technically and legally you are still married. And despite making all of those changes, if you were to be hit by a bus or die from COVID, your spouse can still take one-third or one-half of your estate by choosing to exercise their right to the elective marital share. How could that be? You cut them out of your Will and changed all your beneficiaries.
I wrote about the elective marital share before. Basically, the law is set up to prevent one spouse from disinheriting the other and leaving them destitute and a burden on the state. This came about because a lot of mostly men, but sometimes women as well, were cutting the spouse out of the estate and leaving everything to the girlfriend for example. So the law was changed to allow that the spouse could elect to take their marital share regardless of what the Will said. Then people started moving all their money into non-probate assets which at the time were shielded from being part of the elective share. But the law was changed again just last year to now create the “augmented elective marital share” which includes probate and non-probate assets from which the spouse can take.
The Solution is in the Marital Separation and Property Settlement Agreement
So if you are separated and not yet divorced, how do you protect your assets from your estranged spouse should you pass away before the divorce is finalized? The answer is to explicitly address the issue in your marital separation and property settlement agreement. Your divorce attorney has been trying to get you to focus on reaching an agreement in order to move the divorce proceedings along. With such an agreement in place, the chances are that you can get your divorce completed much more quickly even during the pandemic than waiting for the court's litigation calendar to open up. In that agreement, you must include a clause, usually reciprocal, waiving all rights to take against the other spouse's Will using the elective share or inheriting from a Will that has not been updated yet. Typically these clauses also include waiving any right to serve as the executor or personal representative of the other spouse's estate. You still have to update those beneficiary statements and payable on death designation.
A lot can happen during your separation. And you may have no plans to even get divorced perhaps based on religious reasons. But a consultation with an estate planning attorney during your divorce process is a very wise investment. A lot of estate planning attorneys have relationships with family law attorneys for just this reason. If this is your situation, protect yourself and make sure you have the comfort of knowing exactly what will happen if the worst comes to be.