The estate planning process needs to address the possibility that the client or one or more heirs may become divorced. Among the issues that should be addressed:
Prenuptial Agreements The key to enforcement is proper drafting and full disclosure.
Divorcing Heirs Many parents recognize that their children’s marriages are not in a stable condition. Thus clients may be advised to use inheritance vehicles that restrict the ability of a divorced spouse to obtain part of the family money.
Irrevocable Trusts Virtually all irrevocable trusts should be drafted (and maybe even some revocable trusts), in contemplation of the possibility that one or more of the beneficiaries may get divorced.
Powers of Attorney Many clients have drafted powers of attorney to provide for someone to handle their medical and property issues upon their incapacity, but such powers of attorney are not generally revoked by divorce or legal separation. Either the client should be strongly encouraged upon the first vestiges of divorce to change his or her powers of attorney or the document may provide that in the event that divorce or legal separation proceedings are initiated, then the right of the spouse to serve as power holder immediately terminates and the named successor is automatically appointed.
Buyouts In many cases, a client’s spouse or the spouses of his or her children may hold or obtain an interest in a family business as a result of divorce. Buy-sell agreements should contemplate this possibility and provide a mechanism that allows other family members to buy out the ex-spouse.