Marriage, Divorce, and Estate Planning
What happens when a husband or wife decide that they no longer wish to be married? Once the decision is made to end the marriage, the spouse usually wishes to minimize any benefits that his or her spouse could obtain through his or her estate.
Changes to the estate plan should be made by a qualified estates attorney, acting in concert with a qualified matrimonial attorney, as soon as a decision is made to end the marriage. Inaction could leave the spouse to the vagary of default legislation which is not well-designed to handle the period of time from the decision to obtain a divorce to the date of the final divorce.
Prenuptial agreements or postnuptial agreements must be reviewed as soon as a decision is made to end the marriage. In addition, virtually any Will executed during the marriage could have to be changed.
The key provisions of the Estates, Powers and Trusts Law provide that absent an agreement, one cannot disinherit a spouse. Generally, a surviving spouse is entitled to the greater amount provided for him or her under the deceased spouse's Will or one-third of the deceased spouse's net estate. Should the decedent die intestate (without a valid Will), generally, under New York law, absent an agreement, a surviving spouse is entitled to the deceased spouse's entire estate if the decedent died without children or one-half of the deceased spouse's estate if the decedent was survived by a child. A spouse who is not named in a Will has what is known as a right of election. And, while a spouse can bargain this away in a prenuptial or postnuptial agreement, if it is not bargained away, it is an effective method for a disinherited spouse to make a claim upon an estate. However, pursuant to the Estates, Powers and Trusts Law, after executing a Will, if a testator is divorced or his marriage is annulled and the divorce revokes any disposition or appointment of property made under the Will to the former spouse, unless the Will provides otherwise. Not only does the statute revoke the bequests, it also revokes fiduciary appointments to former spouses. Should a testator have his brother-in-law named as an executor, trustee or guardian of his children, a new Will should, in most cases, be drafted immediately. Legal separation does not automatically revoke the bequest or the appointment to a former spouse.
As to life insurance policies, the Estates, Powers and Trusts Law governs the rights of beneficiaries of pensions, death benefits, IRAs and 401(k) plans. That statute provides that the rights of beneficiaries designated under these policies or plans shall not be impaired or defeated by any statute, or rule of law governing the transfer of property by Will, gift or intestacy. Essentially, a party other than the person designated as beneficiary of the policy or account has the burden of proving that the funds should be paid to him or her. Thus, there is no automatic revocation of such designation under a life insurance policy, pension, IRAs or 401(k) plans.