A common question I hear is when is it time to get an estate plan? Marriage and children are two popular reasons to create a plan, but those reasons are just the tip of the iceberg. Let’s talk about how marriage and the single life affect an estate plan.
Marriage = Inheritance
If you want to inherit from someone, marry them and outlive them. In Utah, state law gives your entire estate to your surviving spouse. This has some exceptions, and they are big exceptions. If your spouse has children by other partners, then dies without leaving a will, then the property will get divided between the surviving spouse and all of the decedent’s children. The calculation changes annually, and includes some non-probate transfers, so there isn’t a hard number or percentage you can apply to every situation. If you find yourself in this situation, talk to an estate planning attorney.
Marriage is not always required to accomplish inheritance. Merely living together, and acting as if you are married, can create something similar to a common law marriage in Utah.
On one occasion, a client asked me to probate the death of their spouse. I learned that when the spouse had died, they weren’t currently married, but had divorced a few years prior to death. This did not stop the survivor. Due to the fact that the divorced couple chose to live together after the divorce, share assets and represent themselves as a couple to the general public, a judge was willing to make a post death pronouncement of marriage! The end result was that the surviving newly declared “spouse” inherited everything in the probate.
Staying Single
On other occasions, the choice to remain partners and not marry is sometimes found to be a clear choice not to be married. This failure to marry can have significant effects on your estate plan. The largest effect is that if you don’t marry, and don’t leave a will, your non-spouse may not inherit from you. Instead all of your assets would automatically go to your children in equal shares.
Choosing not marry also strips your partner of the legal ability to have priority over all others to serve as your guardian and conservator during life or as the personal representative of your estate after death. Non-family are sometimes ignored by attending physicians when decisions must be made about medical care.
All of these issues can be relieved by signing an estate plan. Married or not. Having children or not. If you create a complete estate plan, these problems will be solved. You can choose now who will manage your money or make health care decisions when you have been incapacitated.
Divorce
Divorce has significant effects on an estate plan. Under state law, any inheritance listed to a spouse during marriage is severed by divorce. Divorce court judges sometimes use assets like retirement accounts and insurance to divide up the property, sometimes creating unique situations where a divorced spouse is still going to inherit from an insurance policy or retirement account. But that only can happen with a court order.
Couples with minor children that divorce have a unique problem that some don’t think about until it’s too late. If you have minor children and you die, in almost all cases those minor children will go into the full custody of their surviving parent, your ex-spouse. When the children go into your ex’s custody, their assets normally go into their custody as well. As your ex-spouse inherited nothing due to your divorce, all of your assets will in most cases go to your minor children. As they are too young to inherit, their guardian can request the right to serve as their conservator, taking control of the money. All of your assets will suddenly be in your ex’s control. Many marriages end due to problems with money. In most of those cases, the person that died would probably not want their ex to manage money for their children.
An easy fix to this problem is to create a Trust and name someone you can depend on to manage the assets safely until the minors reach the age you choose and inherit their share. This can keep the money entirely out of the ex-spouse’s hands.
If a couple that has separated fails to divorce prior to death, sometimes unintended inheritances will occur. Long separations are famous for creating this problem, where a person the deceased had no relationship with for decades is suddenly named the sole heir. If you intend to stay apart, and you don’t want the other person to inherit, divorce is necessary. Without a divorce, the surviving spouse will receive either: (1) everything, if they are the parent of all of the deceased’s children, or (2) a significant portion of the assets, the calculated spousal claim, if some of the deceased’s children are not theirs.
Prenuptial Agreements
On occasion, a couple may choose to sign a Prenuptial Agreement prior to marriage. This is an effective way to have any assets listed in the Agreement held separate from the marriage and therefore inaccessible by the surviving spouse.
If you want to know where your assets will end up at your death, and if you want to change those results, talk to an estate planning attorney today! I give free consultations and can give you the knowledge you need to build an effective estate plan.
THIS ARTICLE DISCUSSED GENERAL PRINCIPLES OF LAW. PLEASE DO NOT TAKE ACTION BASED ON THIS ARTICLE ALONE. ONLY AN ATTORNEY CAN DISCUSS YOUR SPECIFIC SITUATION WITH YOU AND THEN HELP YOU DETERMINE YOUR BEST COURSE OF ACTION.
