Should Divorce Planning Be Included in Trusts?

Trust planning can be complex, which is why it should always be handled by an experienced estate lawyer. Depending on the type of trust you choose, there are many benefits you can reap from choosing this kind of tool. More and more, however, individuals are considering putting verbiage inside their trusts to have a spouse removed in the event of a divorce. Like most aspects of putting together such critical documents, there are pros and cons to this approach.

While safeguarding a trust by including such a provision might work out in the long run, not every divorce tears the couple apart entirely. Sometimes the couples part ways but are able to remain close for the purposes of raising children or even managing a family business. Some partners are divorced and then decide to remarry after a period of time. shutterstock_85892581

While the basic concept of planning ahead to protect assets is a good one in general, it’s hard to predict the future in the event that you do get divorced. There’s no telling what kind of emotions might be on the table at that time. In some cases, leaving the trust assets up for negotiation at the time of divorce can allow the parties to make better decisions for certain assets, like business interests.

There are three ways that you can plan ahead without restricting yourself too much in terms of a trust:

  • Aim for flexibility alongside precision to ensure that both parties have options in a divorce
  • Language that protects what the majority of divorce settlors would hope for
  • Seek an attorney who understands that he or she may have duties to both spouses at the trust drafting stage

To learn more about setting up a trust for success, contact us today at (601) 925-9797.

Estate Planning and Divorce in Hinds, Rankin or Madison County

When a divorce—also called a dissolution of marriage—is imminent, meeting with an estate planning attorney in Hinds, Rankin or Madison County is likely not at the top of anyone’s list of things to do.  But, it very well should be.  Keep in mind that divorces can take a fairly long time (months or even years) to complete.  It makes sense to consider what would become of your assets, or even your physical self, if you should become incapacitated or die before the divorce has been finalized.

If you do not take steps to change your estate plan in light of an impending divorce, then your soon-to-be ex may still be entitled to everything that was agreed upon when it was originally drawn up (or as the courts deem appropriate if no estate plan is in place).  This means that if he or she has your medical power of attorney, all of your medical decisions will be in the hands of someone who may not have your best interests in mind.  Likewise, if you are incapacitated and your spouse has power over your finances, it’s possible that you will not be happy with the outcome.

Another concern comes up if you and your spouse are co-trustees on various trusts or other accounts.  Again, if you become incapacitated, the spouse could access and use all kinds of property that you would not want him or her to have access to.  This becomes a real worry when you realize that this person could actually buy or sell property or even take out loans without your consent.

And, if you have inherited or stand to inherit from your parents, another potential problem arises.  Should you pass away before the divorce is final, your inheritance may legally pass directly to the person you were in the process of trying to get out of your life.  Even if you have assets that would be passed directly to your minor children, without a proper estate plan in place, the courts will likely put your ex in charge of any money or other property that you leave them.

In order to protect your interests during a divorce, it makes good sense to talk with your estate planning attorney.  A qualified will attorney in Hinds, Rankin or Madison County can offer advice on where you may be vulnerable.  You may need to work with him or her quickly in order to revoke the appropriate documents, and keep in mind that you might need to contact various institutions personally to ensure they are aware of the revocation.

Once a divorce has become final, there will probably be some accounts and situations in which ex-spouses are no longer beneficiaries, but there are others where you will need to make deliberate changes.  An estate planning attorney who is familiar with the laws specific to Mississippi is the best option for ensuring that you are protecting yourself both during and after a dissolution of marriage.

Medicaid Qualfying Divorce?

An article in the most recent AARP magazine gives the impression that the only option that many seniors have for qualifying for Medicaid and protecting some assets is to get a divorce.  While divorce is certainly one planning option, it is only one of many, and almost always the last resort.  After a couple has shared a lifetime together, weathering storms and celebrating triumphs, very few people desire to divorce their mate as an asset protection device.  The good news is, you don't have to.  There are always other asset protection options, many of which will protect as much if not more assets than a divorce would.  In fact, in 18 years of practice, I have only had one client choose a divorce for purposes of qualifying for Medicaid once, and that was a rather complicated case involving disabilities of both spouses, each needing Medicaid in different states.  The complexity of planning around the different qualification rules of two different states for a married couple proved to be unworkable, and a divorce was the most logical choice.  But such cases are extremely rare.  Common wisdom from many well meaning "advisors" will often suggest that this is the only choice.  Sadly, some of these well-intended advisors sometimes even include lawyers that are not well versed in elder law, but there are almost always other options.   If you are being advised to get a divorce to protect your assets from Medicaid, get a second opinion.  There are many, many other options, and an experienced elder law lawyer can advise you of all available options.