You just got divorced. Early on, you worked out a custody agreement regarding the kids, decided who would live in the house, and you just finalized the property issues. Finally, your affairs are in order. Time to get back out there and move on!
Or is it?
A surprising number of people forget to take care of one very crucial piece of financial business after they get divorced: updating their estate plans!
Believe me, I get it. The last thing you want to deal with after a protracted and nasty court battle with your ex is more lawyers. But that is absolutely the time to do it. Letting it slip by is way too easy, and it happens all the time. I am surprised that my divorce attorney colleagues often leave this on the table and do not make it a standard part of their practice to counsel their clients on how important it is to review their succession plans, or if they don’t handle successions, recommend them to someone who does.
Nothing makes a lawyer’s eyes sparkle with delight more than a client who asks, perhaps a little desperately, “My husband forgot to update his will after he got divorced and we got married, but the divorce invalidates his will, right? RIGHT?” No. It most certainly does not. But the bright side is, that lawyer may be able to pay for that boat he’s been eyeing because of the protracted court battle he knows is about to ensue.
In all seriousness, updating your estate plan is pretty quick, easy and painless, especially right after the divorce when your mind is still on it. It really is as simple as reviewing and probably removing your former spouse as your legatee and executor, and filling out a quick online form to remove her as beneficiary from any life insurance, pension and survivor benefit plans. Also, you should look at who is designated agent in your powers of attorney and healthcare declarations. My clients generally don’t have to worry about this last part. Perhaps I am too cynical, but I assume there is a fair likelihood my client will get divorced before he dies. While it isn’t feasible with wills, through some tricky wordplay I can and do structure powers of attorney and healthcare declarations to automatically exclude a spouse after a divorce – without directly using the word “divorce,” for obvious reasons. So that is, at least, one less thing to worry about.
Anyway, let’s say our hypothetical second wife was married to the decedent for a while, but not long enough to accumulate much property to show for it. The husband and second wife bought a house together, but the will still leaves the husband’s share of all his property to the first wife. Since Louisiana property law clearly enshrines the rule that no one can be compelled to own an interest in property, the first wife may be able to force a sale of the marital home no matter what the second wife’s interest is. Is wife #2 completely out of luck? Not necessarily. A knowledgeable and creative lawyer can find a way to cobble together a solution; albeit an imperfect one, from various rules designed to protect the marital institution and the property rights associated with it.
Louisiana, somewhat deservedly, I think, does not have the best record on protecting women’s rights. A major exception is our law on community property, which protects a non-earning spouse from destitution when the marriage ends (I am not implying that only women can be non-earning spouses, which of course is not the case. However, there is no question when these laws were enacted some two centuries ago that the legislature’s intent was to protect women, whom they did not contemplate as breadwinners). In addition to community property law, Louisiana provides that a surviving spouse may receive a marital portion of a deceased spouse’s estate if the deceased spouse died “rich” in comparison to the surviving spouse.
What does that mean? It depends. There is no definitive legal “test” to determine what constitutes one spouse dying rich compared to the other spouse. The surviving spouse’s income and earning capacity are irrelevant to the marital portion determination. Instead, the percentage of the estate that constitutes the marital portion depends on whether the couple had kids, and if so, how many. If there are forced heirs, the marital portion can be placed in usufruct for the rest of the surviving spouse’s life without violating otherwise conflicting forced heirship laws. Even if the spouses were separated at the time the decedent passed, the surviving spouse who is not at fault in the separation can still claim a marital portion in addition to taking advantage of her community property rights.
Each circumstance will be different, and will largely depend on the individual facts of the case and how the judge views the totality of the circumstances. However, the main point here is fairness and equity. If a surviving spouse’s only fault was marrying a procrastinator who could not motivate him or herself to change their will, the law makes sure they are not left to the whims of fate (or worse: greedy and conniving ex-spouses).
The nature of the decedent’s property will guide the way the court treats the surviving spouse’s marital portion. Generally, I have found that judges can be pretty creative in cobbling together community property rights, usufructuary rights, and rights to a marital portion to fashion a remedy for the surviving spouse that takes into account her objectives in seeking it. So more often than not, the ex-spouse trying to use an outdated will to dislodge the surviving spouse from the marital home will not succeed.
All that said, it is obviously far cheaper, easier and less traumatically painful to just buck up and ask your lawyer, after the divorce is done, about your succession plans. Better yet, hire a lawyer who has the foresight to nudge you in that direction until you do what you both know needs to be done before it is too late.