Ex-spouses can inherit your cash, and different estate-planning errors
Sarah Jessica Parker and Bridget Moynahan can be seen on July 27, 2021 in New York City on the set of “And Just Like That …”, the sequel to “Sex and the City” in Midtown Manhattan.
Raymond Hall | GC images | Getty Images
For many people, the last will and testament, a document that specifies how their property should be distributed after their death, is their final message to the world.
Depending on how you plan, it may hold some surprises for those who are close to you.
One such shock was a twist on HBO’s new revival of “Sex and the City” entitled “And Just Like That.”
(Warning: spoilers ahead.)
The show’s main character, Carrie Bradshaw, learns while reading her late husband’s will that he left his ex-wife $ 1 million.
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“When people have unfinished business, they tend to throw money on them,” says an attorney on the show.
“Why is she in there at all?” Bradshaw, played by actress Sarah Jessica Parker, asks later.
A television scenario in which an ex’s name appears in a will hardly reflects typical real-life circumstances, according to New York estate attorney Martin M. Shenkman.
“In 40 years I’ve never seen anyone leave anything to their ex-spouse,” Shenkman said.
However, there are exceptions when, to the surprise of other heirs, you accidentally leave money to people you no longer want.
How your ex could still inherit your money
The only exception to which an ex-spouse might get your money when you die is if you fail to change your beneficiaries under a retirement plan, Shenkman said.
State laws generally provide that ex-spouses lose all property rights after divorce.
However, because pensions are regulated by federal law officially known as the ERISA or Employee Retirement Income Security Act of 1974, no state regulations apply.
So if you don’t update your beneficiary titles, your ex could still inherit the money.
Annuities aren’t the only accounts forgotten to update. Bank account names are often difficult to find, and circumstances tend to change from the time they are first set up, Shenkman said.
At a recent meeting, Shenkman discovered that a wealthy couple had nine bank accounts (excluding broker accounts) with six different financial institutions. His advice to them was to reduce the number to two, ideally at the same bank, in order to make administration – and the respective designation of the beneficiaries – easier.
“Simplify,” said Shenkman. “Consolidate. Take control of what you have.”
Resist the urge to use your will for revenge
While it may be tempting to disinherit someone you’ve fallen out with, Shenkman says that he generally tells his clients not to take that approach.
“It’s mean and can create all sorts of problems like a will challenge,” he said.
There is always a chance that you can make up, even on your deathbed. At this point, it’s too late to update your will and estate plan, Shenkman said he usually tells his clients.
“Leave them a little less,” he said. “Don’t say anything bad.
“Be hopeful that you will make up.”
However, as the modern concept of family evolves, some people may choose to include friends who feel like family in their wills.
Officially labeled unnatural legacies due to the fact that they don’t include typical beneficiaries such as spouses and children, these cases should be backed up with specific language to make it clear that it wasn’t an accident, Shenkman said .
An example might be: “I am leaving my friend Jane $ 1 million, although that reduces my legacy to my children because of the wonderful and supportive friendship I have with Jane for over three decades.”
So that your wishes are implemented the way you want them to be, it is important to find the right specialist, be it a lawyer, an auditor or an investment advisor.
“The most important thing the independent professional brings is objectivity,” Shenkman said. “It’s really hard to see the mess you made yourself.”