How Does Divorce Impact Your Estate Plan in Maryland and the District of Columbia?

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A Maryland or District of Columbia divorce DOES impact your Estate Plan. Essentially, in either jurisdiction, a finalized divorce will automatically disinherit your ex-spouse from receiving anything under your Will. For this and other reasons, after a D.C. or Maryland divorce, it is crucial that you update and revise your complete Estate Plan. However, a Last Will and Testament is not the only estate planning document impacted by a divorce, and the divorce court’s final Divorce Decree may be a factor as well.

Beneficiary designations

One aspect of Maryland/D.C. estate planning involves a conscious focus on beneficiary designations for instruments like insurance, financial, and retirement accounts. Most of these assets will pass upon death without any sort of probate. A divorce will not change any of these designations. You may have listed your spouse as a beneficiary to these instruments, and generally, those beneficiary designations should be evaluated during the divorce or shortly thereafter.

How property is titled

In a similar way, the title to real and personal property can be designated in a manner that will allow the property to vest in the beneficiary or co-owner by operation of law without the need for probate. For example, it is common for spouses to title the marital home as joint tenancy or tenancy by the entireties. These should be evaluated during the divorce or shortly thereafter.

Final divorce decree

That being said, in some divorce cases, the issue of estate planning is raised and included in the divorce court’s final Divorce Decree. This is usually related to life insurance and/or beneficiary designations for financial retirement instruments like IRAs, 401ks, and similar. The divorcing spouses may agree, or the court may order that beneficiary designations be “for the children” or listed as the ex-spouse. The court can order certain estate planning results as a method of ensuring alimony and/or child support continues in the event of a tragic death.

The court’s Final Order can also relate to how the title to personal and real property is designated. For example, where one spouse is paying the mortgage and expenses for a property, the court might order that the title to that property remain in joint tenancy. Again, this may be the court’s effort to ensure support and financial resources for children or a spouse receiving alimony.

Financial powers of attorney

In Maryland, a financial power of attorney given to a spouse automatically stops being valid when a divorce action is FILED. In the District of Columbia, a financial power of attorney remains valid and is not impacted by a divorce filing or a final divorce. Divorcing spouses should take the necessary corrective action.

Trusts

With respect to trusts, matters are more complicated. In both Maryland and D.C., the divorce laws have no direct or automatic impact on what the trust documents instruct. So, if the trust documents indicate that the spouse is a beneficiary, then the spouse remains a beneficiary of the trust until that is changed. Making changes may be “easy” or “difficult,” depending on how the trust documents are drafted. As such, potential divorce situations should be considered at the time the trust documents are created.

Again, divorce in Maryland or D.C. will not automatically modify health-related documents like a living will, advanced care directive, or a healthcare power of attorney. So, these should be reviewed and updated.

Maryland and D.C. Trust and Estate Planning Attorneys

If you are thinking about establishing a trust or need estate planning documents drafted, contact the Maryland and D.C. trust and estate planning lawyers at The Law Offices of Thomas Stahl. We have the experience and expertise you need. Schedule a consultation today or call us at (410) 696-4326 or (202) 964-7280. We have offices in Columbia, MD, and Washington, DC.

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