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How To Revisit Your Estate Plan After Divorce: A Case Study

Updating your Estate Plan after a divorce can feel overwhelming. Read through our helpful guide for a breakdown of the process to follow

If you have already navigated the Estate Planning process once, it can be frustrating to try and revisit your former plans. However, after a big change — like divorce — it is crucial to update your Estate Planning documents so they reflect your new interests. 

Something a lot of divorced parents deal with is deciding how to allocate their assets to ensure their children are taken care of no matter what. Depending on the situation, this can open up some challenging family conversations. However, Trust & Will aims to make the process as seamless and efficient as possible. 

Our legal team understands that Estate Planning, especially after a big life change, can be intimidating. Luckily, they have hand-picked different scenarios to review in the hopes that others could benefit from the same advice. Everyone is different, but if you are searching for Estate Planning answers after a divorce hopefully the following case study can help. 

Keep reading for an example of how a divorced mother worked to make sure her child would receive the inheritance she wanted for them. We’ll discuss:

The Problem 

Shayla* is a divorced mother who co-owns a house and an additional property with her ex-husband. Together, they have one son, Kyle*, who is in his 30’s and currently lives with Shayla. Her concern is that if she were to die before her ex-husband, who would inherit the house and property? 

She worries that ownership of these assets would both pass to her ex-husband, rather than her son Kyle. Shayla has concerns that her husband may take out a reverse mortgage on the properties -- and one day leave Kyle without equity or assets. 

Unfortunately, Shayla does not trust the word of her ex-husband when it comes to this issue. She wants to take legal steps towards protecting her interest and ownership, making sure Kyle one day inherits her half. 

This has led Shayla to seek the advice of an attorney -- so she can guarantee something for Kyle’s future. So, how do you make sure the person you want to receive your assets actually inherits them -- especially when people you no longer trust are involved? 

The Solution 

Divorce is challenging enough already -- without the added concern of future financial manipulation. Unfortunately, this is a reality for many divorced Americans. It is far too common for individuals to live in fear that their assets will be used unwisely after their death, particularly when there are children involved. 

Luckily, there are actionable, legal steps that can be taken to ensure the right people inherit your assets. The specifics may vary depending on your particular situation and whether or not your Estate Plan was updated at the time of divorce. However, in the case explained above there are two things Shayla can do to make sure her ownership and interest one day transfers to her son:

  • Determine the type of property ownership

  • Create a Trust to leave her interest to her son

*If you want more guidance on updating your Estate Plan after a change in marital status, read our overview on Estate Planning and Divorce

Determine the Ownership Type

The first issue to consider is the legal way in which you co-own the property. There are several different types of co-ownership. Each type has its own characteristics, but one of the largest issues is whether or not there is a “survivorship” right. 

A survivorship right essentially states that your share of a co-owned property would automatically go to the other co-owner(s) in the event of your death. In this case, the property would not pass through your estate plan. If there is no survivorship right, your interest in the property would in fact be distributed through your estate plan.

For unmarried individuals, the two most common forms of co-ownership are a Tenancy in Common and a Joint Tenancy. Importantly, Tenancy in Common has no survivorship right, but Joint Tenancy does. So, if you own the property as joint tenants, your interest would automatically go to the other co-owner after your death — in this case to your ex-husband.  

In order to direct where your ownership interest goes, you would need to hold that property as a Tenancy in Common. That would allow you to specify your 50 percent interest in the property for Kyle after your death. 

Create A Trust To Distribute Interest

The second issue to consider is how to dispose of your interest in the property. You can use either a Last Will and Testament or a Trust to specify where your assets will go after your death. A Trust may be preferred in this case, particularly if the value of the home or property could result in probate. It is not uncommon for the cost of probate to be so high that a property has to be sold to pay the probate fees -- which would undermine your efforts to pass the property to your son.

Essentially, with your interest held as Tenancy in Common you would need to create a Will or Trust to specify that your interest should pass to your son after your death. You could also consider naming an alternative beneficiary, in the event that your son predeceases you or is otherwise unable to take the property.

Other Concerns: Although not at issue here, a Trust might also be a good choice if the beneficiary is under 18. As a Trust would help ensure the other parent does not have indirect control of the property as guardian of a minor. 

 Believe it or not, an estate plan actually needs to be revisited every three to five years regardless of marital status. Hopefully this can help to reframe your mindset as you navigate the process of protecting your assets. There are numerous legal steps divorced parents are able to take to ensure their children are taken care of. In Shayla’s case this may mean redefining the ownership type of her shared properties. If you are going through something similar know that by working with the legal professionals here at Trust & Will you do not have to tackle these problems alone. 

If you’re ready to start your own Estate Plan, ensure that your family and loved ones are protected or update an existing plan, explore the options at Trust and Will today! 


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