The intersection of Marital Rights and Estate Planning Attorneys in Pittsburgh, Pennsylvania
Both Family Law and Inheritance matters are what is referred to as in rem. While the matters of divorce and inheritance involve people, they are usually matters related to property disputes. When people get married, the joy of the present seems to make life eternal. However, as we all know, it is not. The law between inheritance and marriage should be addressed before or shortly after marriage to make sure all of the provisions of the marital estate and the inheritable estate comport. These “crossover questions involve both different segments of the law, and in Pennsylvania, traverse between Family Court and Orphans’ Court. Litigation can easily result and having competent legal counsel is a must. At the Luvara Law Group, LLC, we manage this
by having a team of two lawyers since the issues
can require divergent expertise.
Planning the Decision to Marry and Inheritable Estate Matters
What happens if a Will was drafted and executed before getting married and does not include the new spouse in the Will? That spouse is entitled to receive what amounts to an “intestate share” in Pennsylvania. This may provide the surviving spouse with a significant portion of your estate even though the spouse’s name does not appear in the Will. While the intent may have been to leave the estate others upon death, the others named in the Will may have to be share with the unnamed spouse. The law creates a legal fiction that the decedent essentially forgot the spouse even though the spouse came later.
It is advised that the Will be substituted by the writing a new Will, or, by amendment or modification by another document called a Codicil. While the Codicil is a valid method, most competent counselors would recommend that you write and execute a new Will, which will revoke the prior Will, in order to include your spouse after you have been married. Drafting a new Will shall more specifically provide for the distribution of assets, such as to real property and personal property, to provide for a spouse without having unnecessary ambiguity. However, this allows the give your spouse more than what they would have received from the intestate share. If it provides less, then an Elective Spousal Share may reactivate as a legal issue.
Also, consider if a Will is drafted “in contemplation of marriage,” which would mean that you were well-aware that you were getting married and chose to not include your spouse in your Will, this may change what your spouse is entitled to take under your Will. The dispute may arise when providing for a spouse is deemed inadequate for that spouse upon the death of the decedent.
Under Pennsylvania law, the “omitted” spouse may elect to take an “Elective Share,” which is a share of the deceased spouse’s estate they are allowed under PA estate law. Remember, that the Elective Share provides a spouse with something to take in the event that they are disinherited or otherwise taken out of their spouse’s Will. A spouse wanting to take an Elective Share must make this request in writing during the Probate process. Providing for a spouse, E, will reduce the costs or probate since it will avoid the propensity of litigation, which is nearly inevitable if failing to provide.
Divorce and a Decedent’s Estate
In addition to many legal changes that are a result of divorce, the change in family dynamics and friendships can completely alter a previously well thought out estate plan and the underlying intentions. After all, consider that usually a divorce is not done within in a vacuum of discord. Therefore, to revise the fiduciaries and alternate fiduciaries named in a Will or other documents is highly advised. For example, is your ex-spouse’s brother, sister, or friend named as the personal representative or successor personal representative or trustee? If they are, it is suggested that considering whether they should to continue to serve in these roles. Since they are not part of the divorce, these designations are not nullified by divorce.
So what happens to a Will if there is the filing of a divorce? Generally speaking, when divorced in Pennsylvania, all provisions in your Will granting part of your estate to your now ex-spouse will be automatically revoked; means that they are simply no longer in effect. While there are many legal issues surround the dissolving of a marriage, e.g, custody and support, and equitable distribution, updating the updating of estate planning is generally at the bottom of the list; if it even makes the list, when a person is going through a divorce. However, updating estate planning documents, such as a Will, Power of Attorney, Health Care Power of Attorney, Advanced Medical Directive (Living Will), and Revocable Trusts need to be addressed. Read more about Estate Planning
Pennsylvania Estate Documents and Divorce
Consider that filing for divorce creates a presumption of a conflict of interest between the entrenched spouses, in Pennsylvania, some estate planning documents are automatically altered as soon as a petition for Divorce is filed. This can be critically important if a divorce is in progress and then a spouse dies before the final decree of divorce.
Consider, for example, that under 20 Pa. Cons. Stat. § 5605(c), provisions that name a spouse as an Agent under a Power of Attorney, Health Care Power of Attorney, and Advanced Medical Directive are deemed invalid and revoked upon filing for divorce. If there is not a successor Agent named in the documents or if the successor can no longer act, the document will be inoperable. Of course, if you revise your Power of Attorney after divorce, or in contemplation of divorce, and you still name your spouse as your Agent, then the designation will be upheld.
Pennsylvania Treatment of Estate Documents and Divorce –The Will
In Pennsylvania, provisions in a Will or Revocable Trust that leave part, or all of the assets to a spouse, or names your spouse as a fiduciary (executor or trustee), it becomes ineffective after both a divorce petition has been filed and grounds for divorce have been established, as set forth in 20 Pa. Cons. Stat. §§ 2507 and 6111.1. While the timing of the revocation of provisions pertaining to a spouse in a Will or Revocable Trust are a little different than in Power of Attorney documents, once the grounds for divorce are established, which take place during the divorce proceedings, and not automatically at the time of filing for divorce, any part of the estate that was to pass through the Will or Revocable Trust to the ex-spouse will pass to the contingent beneficiaries named in the documents. The successor fiduciaries named in these documents after your ex-spouse’s designation will control.
Estate Matters and Minor Children--Divorce
Guardianship provisions set forth in a Will for minor children should also be re-examined. Although, you cannot remove a parent’s right to care for a minor child (unless they are proven as an unfit parent by a court of law), the persons previously designated as guardians for your minor children may not be who should serve in these roles in the event of death of one or both ex-spouses.
Retirement Provisions: IRAs, 401(k), and Pensions
Other issues that arise in estate matters after divorce are designations of a spouse as a beneficiary of a life insurance policy, annuity contract, or other contractual agreement (including most retirement accounts, brokerage accounts, IRAs and 401(K)’s. In most States, like Pennsylvania, these designations become ineffective upon divorce, so long as the designation was revocable at the time of the policy-holder or owner’s death. Such a designation also becomes ineffective if the owner dies during divorce proceedings after grounds for divorce have been established. In this situation, the ex-spouse is treated as if he or she had predeceased the owner and the insurance policy or other account will go to the contingent beneficiary. Once a divorce is finalized, the primary and contingent beneficiaries listed for each account or policy should be updated to ensure that the designations carry out your current wishes.
It is important to be aware that the result of spousal beneficiary designations after divorce under federal law is different than Pennsylvania law. If a spouse is a beneficiary under a retirement plan governed by the Employee Retirement Income Security Act (ERISA), the beneficiary designation is not automatically revoked upon filing or even finalizing a divorce. Beneficiary designations through ERISA and other federally administered retirement plans must be revisited once a divorce is finalized. Otherwise, unless properly addressed, a spouse can still inherit. These designations cannot be changed without spousal consent (even after divorce) or a court order. Often times, spousal interests in these types of assets are dealt with through property settlement agreements.
Special Consideration for Family Business and Self-Employed Spouses
More and more, people have started businesses or are otherwise self-employed. There are special problems when there is a family business no matter the size. Sometimes, spouses work in the same business. Spouses involved in a closely held business will need to examine corporate documents as part of the divorce process, such as shareholder agreements, buy/sell agreements, insurance (key-person insurance) and other related documents controlling the distribution of power and assets of the company. These documents are particularly relevant to the continued operation of the business and may have a significant effect on each of the parties’ individual estate plans as they move forward with their separation.
Important Pennsylvania Statutes
Sections 20 Pa. Cons. Stat. §§ 2507 and 6111.1 govern the impact of a divorce in Pennsylvania on a will, revocable trust, and other revocable conveyances. The timing of the revocation of a provision in favor of a spouse under a will or trust is different than under the power of attorney statute. Instead of revocation occurring at the time of the filing of a divorce, revocation occurs once the grounds for the divorce are established. Establishing the grounds for the divorce takes place during the divorce proceedings, not immediately at filing. Once the grounds for the divorce are established under Pennsylvania law, any terms in favor of the spouse will be revoked, including nomination as a fiduciary or beneficiary under the documents.
Section 2507(2) governs the impact of a divorce or pending divorce on provisions in a testator’s will under Pennsylvania law and states:
Divorce or pending divorce.–Any provision in a testator’s will in favor of or relating to the testator’s spouse shall become ineffective for all purposes unless it appears from the will that the provision was intended to survive a divorce, if the testator:
is divorced from such spouse after making the will; or
dies domiciled in this Commonwealth during the course of divorce proceedings, no decree of divorce has been entered pursuant to 23 Pa.C.S. § 3323 (relating to decree of court) and grounds have been established as provided in 23 Pa.C.S. § 3323(g).
Section 6111.1 governs modification by divorce or pending divorce on any provision in a revocable conveyance (including a revocable trust). Section 6111.1 closely mirrors section 2507(2) and states:
Any provision in a conveyance which was revocable by a conveyor at the time of the conveyor’s death and which was to take effect at or after the conveyor’s death in favor of or relating to the conveyor’s spouse shall become ineffective for all purposes unless it appears in the governing instrument that the provision was intended to survive a divorce, if the conveyor:
is divorced from such spouse after making the conveyance; or
dies domiciled in this Commonwealth during the course of divorce proceedings, no decree of divorce has been entered pursuant to 23 Pa.C.S. §3323 (relating to decree of court) and grounds have been established as provided in 23 Pa.C.S. §3323(g).