Ending a marriage can be stressful and overwhelming. To legally dissolve a relationship, you need to file forms, review your finances, and negotiate your routines and responsibilities. Divorce can impact many aspects of your life, including your estate plan. It can change aspects of your probate estate as well as non-probate assets.
Revocable Living Trusts, Explained
A revocable living trust, also known as an inter vivos trust, is created during a person’s lifetime. The individual who creates the trust re-titles certain assets (ex: real estate, cash, stocks, bonds) and appoints themselves as both the trustee and the beneficiary of the account. This gives them the authority to manage the assets in the trust and keep control of them. While the individual who created the trust is alive, they can distribute those trust assets to themselves and enjoy the benefits. A revocable living trust is revocable because the trustee can change the terms at any time. They can also revoke the trust, if they want.
When the original trustee (the person who created the trust) dies, the named successor will take over. They’ll be responsible for managing any assets that are left in the trust. Those responsibilities may include distributing the assets to other beneficiaries, as per the trustee’s instructions.
Revocable Living Trusts and Divorce
While a divorce can significantly impact the assets in a revocable living trust, it may not directly change the terms of the trust. When a trustee creates a revocable living trust, they specify what they want to happen to the assets in that trust. If the trustee later gets divorced, they might want to change the beneficiaries of the trust assets.
Let’s say, for example, the trustee creates a revocable living trust and specifies that they want all of their stocks and bonds to go to their spouse. If the trustee divorces, those stocks and bonds would still go to their former spouse. If they no longer want the spouse to receive those assets, the trustee would have to change the terms of the trust to reflect that. They would need to change the language and indicate who, instead of the spouse, should receive those assets.
If you have recently gotten divorced or are in the process of divorce, now is a good time to review your estate plan. You want to make any changes or updates to protect your assets and ensure that they’re being distributed to the proper beneficiaries. Are there assets that you were planning to give to your (ex)spouse that should now be removed? Is your (ex)spouse listed as your trust successor or the person who will manage assets for your children? If any changes need to be made to your revocable living trust, an estate planning attorney can explain your best options.=
Have Questions? Contact Brian M. Douglas & Associates’ Estate Planning Team
While the process of divorce is not always easy or pleasant, it is a good time to review your estate plan. Having an experienced estate lawyer on your side will help you avoid any legal pitfalls and will make sure your revocable living will matches your intent. Taking steps to update your trust now will give you peace of mind and save you from future legal headaches.
If you have any questions about revocable living trusts or how divorce can impact your estate plan, please reach out to Brian M. Douglas & Associates’ estate planning team. You can reach us at (770) 933-9009 or use our online contact page. We’re always happy to help.