Divorce, Blended Families and Your Living Trust

If your marriage has ended in divorce, your spouse has died, or you have remarried and both spouses have children from a prior marriage, you must revisit your Living Trust or any other estate plan and update it along with all your beneficiary designations.


Going through the process of ending your marriage can be stressful enough without worrying about the status of your assets in the event of your death. The fact is, you could die during the divorce proceedings and before the divorce becomes official. Consequently, you should know that your estranged spouse would receive any funds held in financial accounts or insurance proceeds where that spouse is the named beneficiary. Therefore, it is advisable to change the beneficiaries immediately.  

It is almost certain your current estate plan provides that everything you own will become your spouse’s at your death. For that reason, if you have an existing estate plan, whether a Will or a Living Trust, you should update it immediately.

You should also update your Health Care and Financial Power of Attorney documents. Undoubtedly, you named your estranged spouse as your agent in both documents. As a result, the spouse has the right to sign your name for financial transactions, access your accounts, and be in charge of health care and life support decisions. Given the current circumstances, I assume that is not something you would want.

Once the divorce is final, you may need to update your beneficiaries again. Furthermore, if you held a Living Trust with your spouse, revoke that trust and transfer assets to a new trust.

Blended Families

Suppose you have remarried, and you and your spouse have children from a prior marriage. In that case, you need to carefully consider your intentions for property distribution upon the death of the first spouse and after the survivor dies.

  • Each spouse can have separate Living Trusts and provide for the outright distribution of certain assets when one spouse dies. The Trust can also hold assets for the spouse’s care and welfare and distribute them to the other spouse’s children upon the surviving spouse’s death.
  • A Joint Marital Living Trust can be irrevocable upon the first spouse’s death.
  • Carefully review all beneficiary designations. Often, spouses in second marriages each have sufficient funds and name children from a  prior marriage as the beneficiaries of life insurance or deferred compensation accounts. You can also share individual accounts between your spouse and your children.
  • Be clear, in writing, of all health care issues, organ donations, and funeral plans. Certainly, you want to avoid conflicts between children and a surviving spouse during a difficult time. A Health Care Power of Attorney document directs what you want to be done.

If your family situation is similar to any of these examples, or you are single or had one marriage, you must have a current estate plan. 

Living Trusts

At the end of your life, or if you become incapacitated, if you have property or bank accounts in your name, you are at risk of Probate.

  • A Will must be probated. The rule is no one can legally sign your name. Therefore, at your death or incapacity, all assets in your name are subject to the full probate process, which averages 18 months and is costly.
  • A Living Trust completely avoids probate.
  • A Living Trust estate plan includes Health Care and Financial Power of Attorney documents and a Last Will and Testament for guardianship of minor children and to “pour over”  any assets still in your name at your death, out of probate.

A Revocable Living Trust is a written, legal document allowing you to pass your assets (real property, bank accounts, stock, saving certificates, personal property, etc.) to your family, friends, or charities after your death – outside of Probate Court. Your life insurance policies and deferred compensation accounts can name your Living Trust as beneficiary, subject to essential tax considerations.

Contact us today for further information or visit Tuohy Law Offices now.

Tom Tuohy

Learn more about Tom Tuohy

820 West Jackson Boulevard  
Chicago, Illinois, 60607

This blog entry has been created for information and planning purposes. Therefore, it is not intended to be, nor should it be substituted for, legal advice, which turns on specific facts and laws in specific jurisdictions. No reader of this blog should act or refrain from acting based on any information included in, or accessible through, this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the reader’s state, country or other appropriate licensing jurisdiction.