VALENTINE’S DAY DIVORCE: THE IMPORTANCE OF HAVING AN UPDATED ESTATE PLAN DURING THE PENDENCY OF A DIVORCE
By Kristin Gifford, Esq.
Whether it is finally acting on New Year’s Resolutions, setting a deadline on giving the relationship one last effort or the pressure of Valentine’s Day, divorce filings generally spike during the weeks following Valentine’s Day. Those who decide to proceed with divorce are consumed by the immediate issues such as child custody and the division of assets and liabilities. However, an important issue is often overlooked – “what happens if I die during this process?”
Existence of Estate Planning Documents
Nevada statutes provide ample protection for divorced individuals. Generally, divorce or annulment of the marriage revokes every devise, beneficial interest, or designation to serve as personal representative given to the testator’s former spouse in a will or living trust that is executed during the marriage.
Still, Nevada statutes do not address deaths during the pendency of a divorce. In Nevada and in most other jurisdictions, a divorce decree is the final and absolute determination of a divorce. Therefore, when there is a pending divorce and the divorce decree has not been issued, the parties are still legally married, and the surviving spouse is still entitled to his or her share of the deceased spouse’s assets as indicated in the will or living trust. Therefore, it is a mistake for divorcing individuals to wait until the divorce is finalized to update his or her estate plan. Rather, during the pendency of a divorce, it is necessary to update estate planning documents because there is no statute to cover this gap in the divorce process.
No Existing Estate Planning Documents
For decedents who die having no estate planning documents in place, a probate proceeding may be required and the Nevada intestate succession statutes will apply. As mentioned above, until the divorce decree is issued, the parties are still legally married, and for a decedent who is survived by his or her soon to be ex-spouse and children, the decedent’s estate will be distributed to the surviving spouse and children.
The matter is further complicated if the decedent is survived my minor children with regard to the control and management of the assets on behalf of the minor children. In this situation, not only is a probate proceeding necessary to administer the estate of the decedent, but there will also be a simultaneous guardianship proceeding for the minor children’s share of the estate. When there is hostility between the ex-spouse and the ex-in-laws, these proceedings tend to be long and costly as there will be scrutiny from both sides.
Assets which contain a beneficiary designation, such as retirement accounts and life insurance policies, are also easily overlooked during the pendency of divorce and even after the divorce is finalized. If the soon to be ex-spouse is named as the beneficiary, the surviving spouse will be entitled to collect that asset. Further, if the children are minor and are named as beneficiaries, most, if not all financial institutions will require that a guardianship estate be established for the minor beneficiaries to which proceeds can by paid.
Again, it is a mistake for divorcing individuals to wait until the divorce is finalized to create their estate plan. Rather, the complexity and cost of the above issues can be eliminated by executing estate planning documents during the pendency of a divorce. A properly formulated estate plan and properly drafted trust agreement, along with its ancillary documents, will, at a minimum, provide the nomination of trusteeship for asset management, nomination of guardian for the minor children, and instructions for the administration and distribution of assets for the beneficiaries. Such proper planning will substantially minimize, if not eliminate, the need for probate administration and guardianship supervision and ensure that the decedent’s assets are distributed according to his or her wishes.