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Most couples, especially married couples, get their estate planning done together and draft them accordingly. Most of the time, married couples will get a Family Trust, rather than two individual Trusts, and all the beneficiaries/executors/trustees are listed as each other. After the unfortunate event of a divorce, it is extremely important to get your estate planning updated to reflect your life change. Most people’s wishes and ideas about who should receive and manage your property after your death changes after a divorce. The only way to effectively express that intent is to have a new estate plan drafted.
When you get divorced, you absolutely need to update your estate plan. Oklahoma law provides some safeguards for Wills, Trusts, and certain beneficiary designations. Under Oklahoma law, your former spouse does not benefit under your will or Trust, only if your Will or Trust follow the requirements of Oklahoma law. However, these few safeguards are incomplete and will not change your estate plan to exclude your ex-spouse in some situations. The default rule will not revoke any gifts to relatives of your ex-spouse, for example.
It is important to update your Will and/or Trust after a divorce, because the default Oklahoma rules that may or may not apply, and an experienced estate planning attorney will know which ones need updating. One of the best ways to express your new wishes after the divorce is to create or amend your estate plan. This way, you are able to accurately express your new intent with your estate, since divorce usually changes your intent (i.e. leaving the ex-spouse out), and this will ensure that your wishes are clearly communicated.
One important thing to update after a divorce is beneficiary designations on accounts. When you select beneficiaries for life insurance, retirement plans, or bank accounts, you are making a legally significant decision. After you pass away, the institution holding the account will look at your account information, including the death beneficiary, and distribute accordingly. Ex-spouses, if not changed on the account, have a strong chance of benefiting from the account. Divorce has an very limited effect, if any, on these beneficiary type arrangements.
For example, most people hold a lot of assets in their IRA, 401(k), or other retirement plan. Most people do not realize that these retirement plans are governed by Federal law, and no state (including Oklahoma) can use a divorce decree/order to overcome the beneficiary designation on your retirement plan. This means your ex-spouse will benefit if the beneficiary is not changed. You absolutely have to change the beneficiaries after a divorce decree is final to express your new intent.
Most people have many other things on their minds if they have just gone through a divorce, but it is very important to contact an estate planning attorney, or be active in keeping your estate plan up-to-date. Please contact the Skillern Law Firm, PLLC if you need your estate plan updated or created.
One common question about wills and trusts is about joint or mutual wills. Many people ask attorneys why joint wills are never recommended by attorneys. The reason is not that attorneys want to get more of your money by drafting two wills instead of one. Also, most people may see it as an extra expense that is unnecessary since a couple can just get a “joint will” or “mutual will.” Those assumptions, however, are incorrect. Today, the attorney of Skillern Law Firm and the Tulsa Estate Planning Blog will explain why no (rational) attorney would recommend or even draft a joint will.
First, let’s go through the different types of Wills.
A Joint Will is one document that covers the Wills of two (or more) people, usually a husband and wife. When each of them passes away, the Will is probated and administered for the deceased spouse, and the Will is supposed to then serve as the Last Will and Testament of the surviving spouse. This can and most likely will be problematic for most people. One problem, for example, is what happens if the surviving spouse moves on with their life and has a change of circumstance or even a remarriage. What if a child, who was an angel during the lifetime of the deceased spouse, suddenly abandons their family? The surviving spouse’s right to disinherit the child, or even lower the child’s rights in the joint will is unclear. It is always ambiguous how strictly a surviving spouse is bound to the terms of an old Joint Will. This can be a bigger problem when the couple created a joint will while young. What if a young spouse unexpectedly dies, leaving the spouse with a will that may bind the surviving spouse for 40, 50, or 60 years? This is a risk easily (and cheaply) avoided by each spouse creating their own will. Historically, Joint wills were common since they were regarded as a money-saving and labor-saving technique, but through all these complications and the use of computers, these concerns are now moot.
Mutual Will is another type of will sometimes used in Oklahoma. Mutual wills are two separate wills created with a legal agreement that neither will can be cancelled or altered after one of the spouses has died. This is a difficult situation to protect legally and attorneys often encourage spouses to make a moral obligation to each other, rather than a legal obligation.
The most common solution, and one that the attorney at Skillern Law Firm supports, if for spouses to get Reciprocal Wills or Mirror Wills. In these wills, each spouse has their own document, and each name their other spouse and the main beneficiary, with maybe their children as alternative beneficiaries. This is very common not only for married couples but also for civil partners or those in civil unions. Each reciprocal will is separate and there is no binding, legal agreement applied to the surviving partner who is perfectly entitled to amend this Will or prepare a brand new will in the future.
Skillern Law Firm does not support joint wills and we discourage them to clients and friends. We also do not support mutual wills for the preceding reasons.
We do however allow for people to create Reciprocal or Mirror Wills and this aligns with our philosophy that every single person needs to have a Last Will and Testament in place. If you are thinking about a will, or want to know why you may need one, please read another entitled, “Why Should I Get A Will Now?” Or, if you and your spouse has decided to get a will, feel free to contact us today to set up a free appointment.
I was researching for a client recently who asked about debt and what exactly happens after a significant other or a child passes away. The client had signed as a co-signer on some of the deceased loans and was wondering if she was responsible for that debt. Also, the client was wondering whether her new husband would be responsible for her pre-marital debt if she got remarried. Let’s go through those questions here today on Tulsa Estate Planning Blog.
First off, if you co-sign on or guaranty a loan, you are legally responsible for the debt, even if the other co-signer dies. You have taken responsibility when you co-signed the loan, and having one of the parties of the loan die does not take away your responsibility. It can be a hassle and can make a tough time that much harder, so don’t co-sign a loan if you are not ready to take on the responsibility of the loan should the other party unexpectedly die.
When it comes to marital debt, in the United States, there are two approaches the states take. There are communal property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) and there are common law states (everyone else). The one exception is Alaska, which allows spouses to choose to sign an agreement making their assets communal property. Few take this option.
Oklahoma is a common law state. In common law states, spouses’ property or debt is kept separate unless the spouse shows clear an intent to integrate the property, making them communal, marital property. For instance, a spouse’s previous debt of student loans will not be forced upon the new spouse unless the new spouse shows a clear intent to be obligated to pay it off, like signing a guaranty for the loans. This goes for real and personal property, too. A spouse’s pre-existing savings will not belong to the other spouse unless there was a clear intent for the spouse to share it – like putting the other spouse on the joint account.
It’s good news in Oklahoma when it comes to pre-marital debt. Your debt does not have to belong to your spouse, and your property doesn’t either!
If you would like to know how to put your marital or separate property into a trust or keep it safe from probate by making a will, contact Skillern Law today.
Have a question about estate planning law? Send us an email at firstname.lastname@example.org and ask it. Maybe we’ll post the answer on the next blog post!