Estate Planning Considerations in the Context of Divorce

Estate Planning in Contemplation of Divorce

When spouses separate, in anticipation of divorce, a number of estate planning issues arise. Many spouses wish to disinherit the other spouse upon separation, to be sure that their assets pass for the benefit of the children (or if no children, to their own family). In fact, you are permitted to make a Will that excludes the separated spouse. However, the law provides protections to disinherited spouses that limit the effectiveness of Wills that disinherit a spouse.

The primary protection is the “elective share”, which in Pennsylvania entitles a surviving spouse to elect to receive one-third of certain property, including property passing by Will (though the election cannot be made against life insurance proceeds). Federal law also provides spouses with the right to remain as beneficiaries of qualified pension plans, though that protection does not apply to IRAs and non-qualified pension plans. Practically speaking, many spouses own assets jointly. These assets will continue to pass by right of survivorship, rather than by Will, so long as spouses are married. Thus, absent an agreement to divide a jointly-owned asset prior to divorce, such an asset will most likely automatically pass to a surviving spouse.

It is also important to update your Power of Attorney and Living Will. If such documents had been prepared prior to filing for divorce, chances are the spouse is designated as agent or surrogate, respectively. This could be problematic, especially if the Power of Attorney is “durable”, because a spouse can act under a durable Power of Attorney regardless of whether you are incapacitated. Similarly, if you become incapacitated during the divorce process, and can’t make decisions for yourself, the spouse might be able to make medical and other personal care decisions for you. Thus, these documents should be updated to make a more appropriate appointment, and if you have never executed such documents, they should be developed to allow someone to quickly take over your affairs in the event of your incapacity.

Estate Planning After Divorce

Most state laws attempt to assist its citizens in planning their estates after divorce. In Pennsylvania, state statutes automatically modify your Will, Power of Attorney, and certain beneficiary designations upon divorce. If, prior to divorce, an ex-spouse was named as a beneficiary under a person’s Will, life insurance policy, annuity contract, pension or profit-sharing plan, or a similar contractual arrangement, the ex-spouse’s designation as beneficiary becomes void upon divorce. Similarly, the prior appointment of a spouse as agent under Power of Attorney will be invalidated upon divorce.

Notwithstanding the assistance that the state attempts to provide in modifying a divorced spouse’s estate plan, it is advisable to update all estate planning documents. The interpretation of a Will or beneficiary designation form that contains an ex-spouse can often be difficult, and you should take control of the process, rather than rely on the state’s provisions to bail you out.

In most cases, life after divorce will lead to new relationships, and this is where estate planning becomes more difficult. For most divorced spouses thinking about remarriage, the effect of marriage on property ownership is all too painful a memory. In a second marriage, things are no different. Not only does the new spouse have the same rights upon divorce, that new spouse also has certain rights upon death of the divorced spouse, including the elective share and certain pension rights discussed earlier.

Premarital Agreements

If you wish to “manage” the effects of remarriage on your property ownership and estate plan, a premarital agreement is generally recommended. In a premarital agreement, the parties essentially develop an agreement as to how assets will pass in the event of divorce or death. A premarital agreement may also address issues connected with alimony and child support. While premarital agreements are most often associated with the very wealthy, they can serve as a useful estate planning tool even for the not-so-wealthy, by allowing the estates of each spouse to remain wholly or partially separate.

It should be noted that there is an opportunity to enter into a postmarital agreement if a premarital agreement is not accomplished. However, post-marital agreements can be extremely difficult to enforce. Therefore, it is advisable to develop a premarital agreement rather than a post-marital agreement, if at all possible.

Common Law Spouses

Whether or not a premarital agreement is entered into upon remarriage, a very thoughtful approach to estate planning is necessary, especially when there are children from a prior marriage. It is also important to note that Pennsylvania still begrudgingly subscribes to the concept of a “common law spouse”, which may arise in cases of prolonged cohabitation where parties might be perceived as husband and wife. Common law spouse claims by cohabitants are fairly common in the estate context.


Estate planning is a complex topic that many people tend to ignore, or fail to appreciate, and thus let the state’s intestate distribution process govern their estates. Letting the state determine the beneficiaries of your estate is not advisable generally, especially for those contemplating divorce, or having been divorced. In such cases, a thoughtful analysis of estate planning objectives is critical. This would include not only a review of the passage of assets in the event of death (i.e., Will and beneficiary designations), but also the manner in which you would be taken care of in the event of your own incapacity (i.e., Power of Attorney and Living Will). The time spent with an estate planning attorney is always time well spent.

By Michael Mills

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