Horror Stories Told By Divorce

Storytelling can be a powerful tool, especially in highlighting the importance of having an estate plan in place during a divorce.  Provided below are several stories that provide warnings to the unwary divorcee. 

Story 1: The Unintended Beneficiary. After Brandon was in an accident, he received a multi-million dollar settlement which he held in a trust.  Prior to getting married, Brandon and his wife, Emily, signed a prenuptial agreement to keep the settlement money as Brandon’s separate property.  After several years of marriage, Brandon added Emily as an 80 percent beneficiary of his trust.  Emily filed for divorce after ten years of marriage.  Before the filing of the divorce decree, Brandon got sick and died and Emily ended up receiving 80 percent of the trust.  If Brandon had changed his estate plan at the time of his divorce, his family could have received 100 percent of the trust after estate taxes are paid. 

Story 2: Extra Expenses. John and Sarah agreed to a divorce and their documents stated their retirement plans would be split in half.  They also agreed to equalize the values of the qualified plans such that the excess was distributed to one of them from the other using one order and they each kept their own retirement plans.  The lawyer drafted one order which was not yet signed and filed with the court when John and his new wife died on their honeymoon.  Three orders had to be prepared and files because the parties had to follow the documents as written.

See Robin L. Miskell, Estate Plan Horror Stories: What Happens If You Do Not Have An Estate Plan In Place During Divorce, Lexology, Jan. 7, 2015.    

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.