No one really wants to plan on it, but the reality is, roughly half of marriages in the U.S. end in divorce. The traditional court process is lengthy, expensive, and emotionally draining. (Some might even call it traumatic.) However, when both parties are willing, it doesn’t have to be that way.
With today’s advanced technology, the divorce process can be much easier (compared to what is usually a stressful and unpleasant time.) It’s Over Easy is the perfect example — an online divorce platform that helps couples split much more amicably, so that they can start the healing process much sooner.
Another tool you should be thinking about, whether you’re getting divorced or remarried, is estate planning. Much like the ease of It’s Over Easy, Trust & Will is an example of an online estate planning platform that is both easy and accessible, when compared to traditional methods. So why is estate planning relevant to your nuptials?
Keep reading to understand why marriage, divorce, and estate planning all go hand-in-hand.
What Is Estate Planning?
Estate planning is the process through which you clearly define how you want your estate handled. The documents included in your estate plan, such as Trusts and Wills, are legally binding, meaning that they must be obeyed or there could be legal consequences.
Your estate represents your assets, which can take the form of physical belongings, sentimental items, real estate, and financial assets. Here are some examples:
Real estate properties
Artwork and other collectible items
In your estate plan, you’ll document how your assets will be distributed, to whom, and when. Your estate plan typically goes into effect upon your passing, or when you become incapacitated.
Joint vs. Separate Trusts For Couples
Everyone should see the value in estate planning and waste no time setting up a Trust and Will. If you’re getting married, or are already married, you might be wondering whether or not you should set up a Joint Trust or Separate Trusts.
As you might have guessed, a Joint Trust puts all your marital assets into one, singular trust. This might sound romantic, but what if your partner gets sued? Or you decide to get divorced? All your hard-earned assets are legally entangled, which puts you at more risk.
Separate Trusts protect each individual’s assets separately. This means that if anything unexpected were to happen, your individual assets are better protected. This could be helpful if your spouse decides to take on a financial risk, or again, should you decide to get divorced.
There is one caveat to keep in mind however: Separate Trusts are not allowed in community property states. Even if you have an uncontested divorce, your partner will be entitled to half of your assets if you reside in a community property state.
Do You Live In A Community Property State?
Regardless of what marital stage you’re in (getting married, already married, or getting a divorce), it’s important that you know whether or not you live in a community property state.
You might be able to guess what this means. If you live in a community property state, it means that should you get divorced, any and all assets and debts will be split up equally between you and your spouse. More specifically, it’s any assets and debts that were accumulated during the marriage. Community property could include your income, belongings acquired, real estate, and event debts.
It’s important to know whether or not you live in a community property state because it impacts your estate planning. For instance, as a married person, you can’t have a Separate Trust if you’re in a community property state. You’ll be forced to leave 50 percent of everything to your spouse.
Here are the 9 community property states; do you live in one of them?
To drive the point home, if you live in one of these above states, it means that you’ll be forced to split your assets equally if you get a divorce. Since Separate Trusts aren’t allowed for married couples in these states, you may want to give something called a prenuptial agreement some heavy consideration.
Prenuptials As A Layer Of Protection
When you’re happily married, chances are, you’ll include your spouse in your Will, but you might want to re-think that.
“So what happens if I get divorced? Can’t I just write them out of my Will?”
Unfortunately, most states have protection laws that prevent you from disinheriting your spouse from a Will. If you’re concerned about a possible divorce, or you’re a realist, consider leveraging a prenuptial agreement as a layer of protection.
A prenuptial is a legal contract that you put into place before marriage, and it includes the distribution of assets that you agree upon. This comes in handy especially if the assets are to be distributed unequally, or are outside of state laws.
Already married? Don’t worry! You can make a postnuptial agreement.
Prenuptials tend to be associated, somewhat infamously, with the arrangements amongst the wealthy. However, they don’t need to be! It can simply be a smart move for any couple who honors each partner's right to protect themself in case the unexpected happens. You can also think of it this way: in the case that you were to get divorced, your spouse would be much more likely to walk away contentedly with their predetermined division of assets, rather than being disinherited from the Estate Plan completely.
Read more about using prenuptial agreements as an estate planning tool.
Recently Divorced? Update Your Estate Plan ASAP
This may sound cliché, but Estate Planning truly is a journey, and not a destination. What I mean by that is that your Estate Plan will need to shift and grow as you go through life. A Trust or Will that you establish in your 20s will in no way shape or form maintain its efficacy when you’re, let’s say, in your 70s.
It’s recommended to review and update your Estate Plans on a regular basis. Schedule it in your calendar! As life goes on, your assets will change, your incentives will change, and your legacy will change. Any time you hit a major life event, whether it be a birth, a death, a marriage, or a divorce — it should serve as a reminder to review your documents. (Don’t forget to update it again if you get remarried!)
An Estate Plan’s purpose is to protect your legacy should the unexpected happen. The ironic thing here is that it’s hard to plan for the unexpected. That’s even more reason to keep your legal ducks in a row and update your documents on a regular basis.
If you’re getting divorced, or are recently divorced, how you update your Estate Plan will largely depend on the laws of the state you live in, and that could be complicated. When you’re going through what is an already emotional and sensitive time, you’ll be glad you can set up and update your Estate Plan at the click of a button, and from the comfort of your own home.