When creating joint revocable trusts, clients try to plan for every possible future scenario. Many times, clients wonder what would happen in the event of their divorce, or if the one spouse passes and the surviving spouse re-marries. Trust documents can be written to account for varying possibilities while maintaining flexibility and the best tax advantages for all parties. At Grissom Law, our standard provisions provide for many possibilities, here are a few:
What if my spouse gets remarried after my death but then they get divorced?
Our standard document provisions include a Survivor’s Trust that holds all the trust assets in a separate, irrevocable trust after the death of the first spouse. The surviving spouse is sole Trustee, makes all decisions, and can withdraw money as he or she determines, up to the total amount in the trust. As the sole Trustee, the surviving spouse could withdraw the assets but then the assets are no longer protected from creditors, bankruptcy, or future divorce decrees. We encourage our clients to leave the assets in the Survivor’s Trust for their benefit and protected for their lifetime.
In addition, we include provisions that mandate if the surviving spouse remarries, he or she must sign a premarital agreement excluding the trust assets from the marriage so that if the new spouse and surviving Settlor do ever divorce the trust proceeds cannot be counted as an asset. We provide that if the surviving spouse chooses not to execute a premarital agreement excluding the trust assets, they can no longer serve as the sole Trustee and they are unable to withdraw the principal from the trust but will continue to receive the income. These provisions are included to ensure that the assets in the Survivor’s Trust are not included in a settlement of property if the survivor remarries and subsequently divorces.
What if my spouse gets remarried after my death and wants to leave the assets from our trust to their new spouse? Can they leave the assets to that new spouse or that new spouse’s children?
In our joint revocable trusts, our standard provisions include that the trust becomes irrevocable after the first spouse’s death so that the money in the Survivor’s Trust cannot be passed to a new spouse or their children. Upon the surviving spouse’s death, the assets pass subject to the remaining terms of the trust and the new spouse has no legal right to any of the money. The surviving spouse cannot direct the beneficiary distribution change (i.e. name the new spouses’ children as beneficiaries).
What if my spouse and I create a joint trust but later get divorced?
Our revocable trusts contain a provision that states if either Settlor (creator of the trust) files a petition for legal separation or divorce, and unless and until the petition for separation or divorce is dismissed, then each spouse will be treated as having died intestate (without an estate plan). This provision allows your shared descendants (children) to inherit, but assures your assets doesn’t pass to a soon-to-be ex-spouse’s sister or cousins. It’s best practice to re-write your estate plan as soon as you begin a divorce proceeding to assure your assets will pass to the people you want.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney-client relationship between you and Grissom Law, LLC.