Many people have the misconception that they cannot update their estate plan or even prepare a new Will if they are separated but not yet divorced from their spouse. This is not true. An estate plan can be updated at any time so long as the person has mental capacity and is over the age of 18. The fact that someone is separated from their spouse does not bar them from changing their estate plan, but there are points that must be taken into consideration.
Pennsylvania law protects the married couple. To that end, until a divorce is granted and a judge issues a written divorce decree, a spouse is legally entitled to inherit from the other spouse’s estate. The general principle is that the living spouse is entitled to all of the deceased spouse’s estate if there are no children involved or if all of the children involved are from that marriage and to one-third of the deceased spouse’s estate if there are children involved who were born outside of the marriage. This means that if one spouse dies during the period of separation, and if the deceased spouse failed to provide adequately for the living spouse, then the living spouse can elect to file a “spousal elective share” claim against the deceased spouse’s estate. There are a few legal principles that get complicated here, such as identifying what is included in the deceased spouse’s estate, but Pennsylvania law aims to protect the couple until divorce occurs.
Despite this protection of the marital union, it may still be crucial to update the estate plan once the couple separates. In many cases, a separated individual does not want his or her spouse to continue as the power of attorney/agent in an existing Durable General Power of Attorney or Advance Directive/Health Care Power of Attorney since these documents allow an agent to make certain financial or medical decisions. Thus, it is advisable to prepare new powers of attorney after separation occurs and to deliver notification of termination of existing powers of attorney to the separated spouse through divorce counsel.
Many clients look forward to what life will be like after a divorce. If there are children, significant assets, or real property involved, many clients may prefer to prepare, during the period of separation, a trust as part of their estate plan. A trust acts as a holding place for assets owned by an individual. After divorce, most individuals choose to update the various beneficiary designations on retirement and investment accounts to remove the ex-spouse. In lieu of naming minor children as the new beneficiaries of such accounts, which is a common mistake, the person should consider naming their trust as the primary beneficiary. Further, once a divorce is granted, the individual may update the title to real property pursuant to a divorce decree; for example, the primary residence may be deeded to the individual. Using a trust allows the individual to then deed the home into their trust, which allows the house to avoid falling into the probate process once the individual dies.
If the separated individual fails to update the estate plan and a subsequent divorce is granted, then provisions in an existing Will that favor the ex-spouse are revoked by operation of law. In other words, if the individual fails to take steps to update his or her estate plan, the Commonwealth of Pennsylvania will do it by operation of law. At first glance, this may sound beneficial. However, it can be problematic if children are involved or in amicable divorces where the parties want their former spouse to remain in fiduciary roles. A common occurrence is a situation where the client requests the former spouse to serve as a backup trustee for a trust that benefits their mutual children. In this case, the estate plan must be updated to expressly provide that the nomination of the former spouse in any fiduciary role is to continue post-divorce.
Our firm is well-acquainted with updating estate plans or preparing new estate plans prior to divorce. Please contact us if we can be of assistance to you during a period of separation.