Divorce and
Estate Planning

                A person who is in the process of obtaining a divorce will commonly leave in place the same estate planning documents executed prior to contemplating divorce.  This often means that the estranged spouse will receive all the probate and non-probate assets in the event of death prior to the entry of a final judgment of divorce.

                Even before filing any divorce action, it may be appropriate to revise the estate planning so that the assets will pass to or for the benefit of the children, or to the person??s own biological relatives.

                Under New Jersey law, a judgment of divorce will automatically void most provisions in favor of the former spouse.  However, the fact that a divorce action is pending will not cause any automatic changes in the estate planning of a spouse who passes away prior to the judgment of divorce. 

                There are other risks in relying on the automatic termination of the benefits upon the actual divorce.  For example, an ex-spouse who was the named primary beneficiary on a life insurance policy may still be able to in fact receive the proceeds if the beneficiary designation has not been changed, particularly if the life insurance company is not informed of the divorce.

                Once a person has committed to obtaining a divorce, a revision of the estate planning should promptly be accomplished, if only to avoid the consequences of what would happen in the event of a death during the pendency of the matrimonial action.  At this point, the most prudent action may be to put into place proper estate planning for the long run, past the entry of the judgment of divorce, and to contemplate the various long term issues.  A person may find this a difficult time to take on all the estate planning issues, however. 

                When the couple has children together, it must be considered as to what would happen if a person passes away leaving children who are minors or young adults, at a time when the former spouse is also surviving.  A divorced person may not wish the surviving parent to be in control of the assets which are held for the benefit of the children. 

                If assets are left simply in the name of a child who is a minor at the time of the death, then whoever is the guardian of the minor will have the right to control and manage the assets.  If the other parent is surviving, that parent will have the first right to serve as guardian.  For this reason, it may be better to name other specified persons as trustees, rather than to allow the other parent to hold the assets a guardian. 

                It may also be prudent to have the assets held in trust for the benefit of the children until they attain the age of 25 years or even later, rather than allowing them to have full control over the assets upon attaining 18 years of age.

                While a person may not wish to see the former spouse serve as guardian for their common children, the surviving parent will generally have the right to be sole guardian of the minor children unless that surviving parent declines to serve as guardian, or the surviving parent is deemed by the Court to have problems such that it would clearly be against the best interests of the child to allow that parent to serve as sole guardian.

                In some situations it may be appropriate to allow the other parent to serve as trustee.  One option is to direct that there will always be two trustees, and name the other parent as one of those trustees.

                The possibility of a remarriage will also pose issues.  Persons with children from a previous relationship may choose not to leave everything to the surviving spouse, if only because the surviving spouse may get remarried and leave the assets to his or her own next spouse.   A variety of arrangements may be used, including a trust which will pay income and other distributions to the surviving spouse for life, with the remaining assets thereafter going back to the person's own children from a previous relationship.

                In New Jersey and most other states, a last will and testament will be subject to an automatic partial revocation upon a later marriage after the execution of the will.  The new spouse may then be entitled to an intestate share, regardless of the terms of the will.  There may also be elective share issues.  This situation may necessitate a prenuptial agreement in order to fulfill the estate planning wishes of both spouses.

                It is possible that during the pendency of the divorce action, estate planning issues will be raised, particularly with respect to provisions for the children.