Archive for the ‘post-divorce financial planning’ Category

How to Disinherit Your Spouse

Thursday, February 6th, 2014

Most married people want their surviving spouses taken care of when they die. The statutes of Maryland Virginia and DC reflect this. See a prior article here – Wills and Decedent Estates of Divorced and Divorcing Spouses.

Of course when the marriage breaks down, most people no longer want to provide for their estranged spouse. But divorce takes time. And the state statutes and federal statutes protect spouses. Is there a way to successfully disinherit your spouse before the divorce is final?

State law generally grants the surviving spouse all or part of the probate estate of the decedent by intestate succession when the decedent did not make a Will and by right of election against the Will when the decedent made a Will. Virginia, but not Maryland, expands the spousal protections to the “augmented” estate. The augmented estate includes certain non-probate assets and prior gifts.

Maryland case law suggests that Maryland’s statutory surviving spouse protections can be avoided by the common device of using a revocable trust instead of a Will as the primary estate planning document. Generally this requires executing a revocable trust which includes a clause stating who is to receive the grantor’s property at his or her death and transferring all or some of the grantor’s property to the trust. This keeps the property out of the probate estate and out of reach of the surviving spouse’s election against the Will.

The surviving spouse’s recourse is to seek to invalidate the trust. Karsenty v Shoukroun, 406 Md. 469 (2008) was a case where the decedent transferred property to a revocable trust with a disposition at death other than to his wife. The Court of Appeals of Maryland spent 40 pages discussing fraud on marital rights, unlawful frustration of marital rights and also legitimate estate planning. But the court stopped short of saying you cannot do by a revocable trust what you cannot do by Will. They sent the case back to the trial judge to consider the facts in light of the Court of Appeals 40 page discussion. So if you want to disinherit your spouse so that he or she doesn’t inherit in case you die before the divorce is final, a revocable trust is certainly worth a try in Maryland.

Not so in Virginia. The property transferred to the revocable trust is part of the “augmented estate” and the surviving spouse gets a share of that.
This sort of unilateral action to disinherit the spouse is appropriate only for protracted, contested divorces. In most divorce cases, estate planning is done by each spouse pursuant to an agreement with mutual waivers of estate rights. After all, your spouse doesn’t want you to inherit from him or her either.

 
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