Barry White’s case is an oldie, but a goodie because it highlights the importance of updating your estate plan whenever you have a change in circumstances. Barry White died over 20 years ago in July 2003. At the time of his death, he had been separated for many years from his wife, Glodean White, but they were not legally divorced. At the time of his death, Barry had nine children and was in a long-term relationship with his partner, Katherine Denton.
Despite being separated from Glodean for many years, Barry did not update his estate plan. Accordingly, at the time of his death, Glodean received the majority of his estate pursuant to a Will executed by Barry many years prior and never revoked. Some of Barry’s children, as well as his long-term partner, initiated litigation against his estate over the years following his death, including as recently as 2017. Some or all of this litigation could have been avoided if Barry had updated his estate plan to correspond with his current circumstances.
If you are not legally divorced at the time of your death, your spouse can still receive a portion of your estate through your state’s elective share laws, which provide for certain minimum amounts to pass to a spouse. In New Jersey (and many states), the elective share amount is one-third of both spouses’ combined assets, so the surviving spouse’s own assets generally count against what he or she would receive from your estate. If you are separated, but not yet divorced, and because your spouse legally only needs to receive this minimum amount, you can direct that your other assets pass to any other beneficiaries of your choosing. Therefore, even if Barry and Glodean were not divorced at this death, if he had updated his estate plan to provide for his long-term partner and/or his children, they could have received a good portion of his estate, even if Glodean had to receive some assets.
But what if Barry’s and Glodean’s divorce had been finalized? Generally, under state law, even if you do not update your estate plan following a divorce, the divorce severs any rights a former spouse previously had to serve as a fiduciary for you or receive any of your assets as a result of your death. However, if, after your divorce, you execute new documents naming your former spouse as a beneficiary or as a fiduciary (i.e., Executor), then the former spouse is reinstated back into the new plan in whatever way wish to name him or her. This similarly applies to beneficiary designations under state law. If the divorce is finalized before you pass away, but you have not yet updated your beneficiary designated assets, the legal divorce treats the former spouse as if he or she predeceased you and the beneficiary-designated asset would pass to the contingent beneficiary, if one is named.
Importantly, some assets that stem from an employer may be subject to federal law under the Employee Retirement Income Security Act of 1974 (ERISA). If an account or policy is subject to ERISA, the state law revoking a former spouse’s rights is not applicable, as federal law supersedes state law. Even if a divorce decree (which is issued under state law) provides that an asset previously designated to a former spouse is revoked, if the account or policy is subject to ERISA, the terms of the divorce decree are not applicable and the former spouse would still receive the asset if he or she is still designated as the beneficiary at the time your death.
If you would like to discuss updates to your estate plan due to a change in circumstances, or if you are looking to set up an estate plan for the first time, please call our office at 856-489-8388 or visit our contact page to schedule an appointment.