Estate Planning and Divorce Harvard Case Solution & Analysis

INTRODUCTION:

The most important element in the process of divorce, which needs to be considered closely, is the distribution of assets between the spouses. Generally, the assets of the independent party (husband) are distributed and a share of his assets is given to the dependent party (wife).

Generally there are two types of divorces:

• Mutual Divorce.
• Divorce by enforcement of law.
There are different criteria of distribution of assets under both type of marriages.

Mutual Divorce:

In mutual divorce, both the parties give their consent readily without any undue influence. In such cases, the distribution of the real estate between the parties is settled as per their mutual agreement before or after the marriage.

Divorce by enforcement of law:

In a divorce, which is enforced by law, either the party refrains from giving divorce to the other party or, the party refrains from giving the justified share of the estate to the other party,then in such cases, the victimized party applies to court for its justice and then the distribution of assets is made as per the orders of the court. (Riley, n,d)

Effect of divorce on state planning strategies:

Divorce affects the state planning strategies of the person as if that person was single then that person would have planned different things with respect to their real estate, however, that person would have to change their strategy upon the event of divorce as they would have to consider distribution of their assets. Thus, this would affect significantly on their state planning strategies.

Impact of divorce in estate planning:

In Massachusetts, the former spouse is removed automatically as a beneficiary of a will or trust upon divorce. However, there are times when the client shows his/her intention to keep his or her ex-spouse even after the divorce. Nonetheless, accomplishing these things are not as simple as leaving things alone and a new will or trust would be executed which would re affirm the bequests to his ex-spouse. This would only take place when the divorce has been finalized.

In addition to this, when the divorce has been finalized, a new power of attorney would be made as well as a new health care proxy should also be executed in which the name of its fiduciaries would be clearly mentioned. However, there are few cases when these proxies revoke their designation upon divorce. (DEBRUYCKERE, 2010)

Beneficiary designation is often overlooked in most of the cases, however this is a very important designation as it determines that who would inherit certain specific items such as investments portfolios, IRA’s and 401K’s.

In addition to this, it is wise that divorcing couples should make new beneficiary designations, as well as, these items are overlooked and are generally passed or directed to the designated beneficiary outside of probate. This leads to failure to change in the probate court as the change on who would receive them is often not challengeable in the in the probate court.

Thus, the people should consider various aspects while going for divorce as there are many states in which almost all of the property is transferred to the dependent spouse as well as they are also transferred to the legal representatives of the dependent spouse. Therefore, serious consideration shall be put upon the following factors while going for divorce.........................

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