Considering the growing rate of divorce nationwide, second marriages are no longer a rarity. Yet the financial and legal issues that can confront couples in their second marriage – especially spouses who have children from a first marriage – may require some careful planning.
One question that can arise among children from either a first or second marriage is how a divorce or second marriage may affect the terms of a trust.
For example, a parent may have created a trust and named the children of their first marriage as its beneficiaries, along with their spouse and possibly additional relatives. Upon remarrying, the parent may have had additional children or acquired stepchildren. The children from that second marriage may wonder about their legal right to any potential inheritance.
Control of the trust
As a preliminary matter, a distinguishing feature of a living trust is that its creator retains control of its disposition, including which beneficiaries are named, as long as he or she is in sound mental health. Adding new beneficiaries or changing the terms can be accomplished quickly and easily by simply filing an amendment to the trust.
Inheritance to the ex-spouse
In addition, Delaware law provides that a divorce decree automatically revokes gifts in a trust to a former spouse, as well as any title of executor, trustee or guardian. Instead of going to the ex-spouse, the trust’s assets will pass to any alternate beneficiaries named in the instrument.
As with most legal issues, the impacts of divorce and remarriage on estate planning are not cut and dried. For instance, how a divorce affects inheritance to a former spouse’s relatives – such as stepchildren – may be a bit more complicated, depending on whether their interest is deemed to have lapsed.
Another possible outcome might be the trust assets going to the estate, if the trust language specifically included such a provision for lapsed gifts.
It’s also worth noting that a divorce decree could specifically lay out different terms, thereby overriding the default outcome called for under Delaware’s estate and trust laws.
If you’re on the verge of a second marriage, you may be well advised to review the language of any trusts or other inheritance or estate documents. Consulting with a lawyer experienced in both family and estate laws can be wise when divorcing or remarrying.