When we reach certain milestones in life like marriage, the birth of a child or grandchild, divorce, or second marriage, we all know that we should update our estate plans. It can be challenging to make time to take a comprehensive look at how a divorce or remarriage can affect our plans. But in this post, we'll look at what happens if you don't update your estate plan after a divorce, separation, or remarriage and your spouse's legal rights if you die.
Spousal Rights in Michigan
Michigan law protects spouses from intentional or unintentional disinheritance, providing options if you die without a will or don't provide for your current spouse in your will. A surviving spouse can opt to take their "spousal elective share" instead of following the plan in your will. A spouse is also entitled to certain allowances under Michigan law.
Spousal Elective Shares
Whether you die with or without a will can change the elective shares your surviving spouse may take.
When There is No Will
If you die intestate, meaning you don't have a valid will in place, your spouse's rights depend on whether you have any additional beneficiaries, like children or surviving parents.
- If you don't have any surviving children or parents, your spouse will inherit your entire estate.
- If you have children and all of them are also your spouse's children, your spouse will inherit the first $235,000* of your estate plus the balance of the intestate estate.
- If you don't have any surviving children, but you do have a surviving parent, your spouse will inherit the first $235,000* plus ¾ of the balance of the intestate estate.
- If you have children who are also your spouse's children, but your spouse also has one or more surviving children from another relationship, your spouse will inherit the first $235,000* plus half of the balance of the intestate estate.
- If you have children and one or more, but not all of them, are also your surviving spouse's children, your spouse will inherit the first $235,000* plus half of the intestate estate.
If you have children and none of them are the children of your surviving spouse, your spouse will inherit the first $157,000* plus half of the balance of the intestate estate.
See MCL § 700.2102 (2000). (*Values for the year 2022)
There is a Will
If you die with a will in place, Michigan law allows your surviving spouse to either:
- Abide by the terms of the will, or
Take half of their intestate share, reduced by half of the value of all property the spouse receives from you other than intestate or testate succession.
See MCL § 700.2202(2) (2017). In other words, Michigan law anticipates that you may provide for a spouse through other, non-probate transfers and offsets that amount. These "other" transfers may include:
- Transfers made within two years before your death that are subject to the federal gift or estate tax,
- Transfers made before your death that you retain power over such that the property, or part of it, would be subject to the federal estate tax, or
Property transferred to your surviving spouse upon your death through joint ownership, tenancy by the entirety, as a direct beneficiary, or similar means.
See MCL § 700.2202(7) (2017).
There are some procedural limits to when a surviving spouse can exercise these elective shares. Your spouse must elect these options during their lifetime and within 63 days after the "presentment of claims" or service of the inventory, whichever is later. The elective shares don't apply to assets that pass outside of probate, such as life insurance or retirement account proceeds directed to another beneficiary. However, if your spouse held a general power of appointment over an asset, it is part of the spousal election.
Spousal allowances are mandatory under Michigan law, meaning these aren't optional and are in addition to any spousal elections.
Under Michigan law, your surviving spouse is entitled to a $23,000* homestead allowance. See MCL § 700.2402 (2000).
While the executor is administering the will, your spouse and children are entitled to reasonable support from your estate, paid in a lump sum or periodically. However, if your estate is insolvent, the family allowance can't continue for more than one year. The family allowance is left up to the administrator up to a maximum of $29,000* with the court's permission. See MCL § 700.2403 (2000).
Your spouse is also entitled to household furniture, vehicles, furnishings, appliances, and personal effects from the estate up to $16,000.00*, adjusted for inflation, more than any security interests to which the property is subject. If you don't have $16,000 worth of property in your estate, your spouse is entitled to other estate assets to make up the $16,000 difference. See MCL § 700.2404 (2000).
Both the homestead and family allowances are charges against the estate rather than claims. They take priority over everything except reasonable burial expenses. Your spouse's exempt property allowance similarly takes priority over everything except reasonable funeral expenses and the homestead and family allowances. While normally, these charges would only be against the probate estate, if that portion of the estate isn't enough to satisfy the spousal allowances, if you have a revocable trust, the trust funds may be used to satisfy the allowances. See MCL 700.7605 (2010). (*Values for the year 2022)
Avoiding Spousal Elections
There are methods to avoid the spousal election in Michigan, including marital agreements. As a couple, you can enter into a prenuptial or postnuptial agreement allowing you to waive or modify the rights you have upon the death of your spouse, including your spousal allowances or elections. A spousal agreement is a good idea for couples with high-net-worth estates or second or subsequent marriages when each spouse wants to protect their assets for children from a previous relationship.
An Ex Named as a Beneficiary
In the stress of divorce, we often forget about updating important assets like the beneficiary to life insurance or retirement accounts. Can your ex-spouse still inherit your retirement plan after your divorce? What if you have a new spouse? Fortunately, Michigan law addresses this problem.
A divorce revokes "[a] disposition or appointment of property made by a divorced individual to his or her former spouse in a governing instrument and a disposition or appointment created by law or in a governing instrument to a relative of the divorced individual's former spouse." MCL § 700.2807(1)(a)(i) (2016). So, unless your divorce decree specifically stated that your former spouse would still be the beneficiary to a life insurance policy or part or all of your retirement account, they aren't entitled to receive those funds after your death, even if you failed to update the direct beneficiary information on your account.
Moreover, a divorce will revoke any "governing instrument," which includes:
- A deed,
- A will,
- A trust,
- An insurance or annuity policy,
- An account with a payment on death (POD) designation,
- A security with a transfer on death (TOD) designation,
- A pension,
- Retirement or similar benefit plan,
- A power of attorney or power of appointment,
- A funeral representative designation, and
Any "dispositive, appointive, or nominative instrument of any similar type."
See MCL § 700.1104(m) (2016).
When Your Will Predates Your Spouse
Sometimes, you may have put an estate plan or will in place before getting married. If you don't update your will, Michigan law does provide some protection to your spouse. If your will predates your marriage and doesn't provide for your spouse, they're entitled to the share of your estate they would have received if you died without a will. See MCL § 700.2301 (2005). However, your spouse's share of the estate won't include:
- Property left to your child that isn't the child of your surviving spouse, or
Property left to a grandchild who isn't your surviving spouse's descendant.
In some cases, your surviving spouse may not be entitled to their share of your estate if:
- Your pre-marriage will appears to anticipate your marriage to your surviving spouse,
- Your will makes it clear that it should remain in place even if you subsequently marry,
You provide for your surviving spouse through transfers outside the will, and it's clear from your statements and the amount of the transfer that you intended for these to be a substitute for a share of your estate.
These transfers "outside the will" might include making your spouse a joint owner of your home, making them the direct beneficiary of a life insurance policy, or your retirement fund or 401(k). Your surviving spouse can also exercise an elective share under Michigan statute § 700.2202, as we discussed above, but that will reduce the portion of your estate available under this section of the Michigan statute.
When You Weren't Formally Married
Unfortunately, your spouse won't have many protections after death without a formal will or estate plan in place unless you and your partner are formally married. While a handful of states recognize common-law marriages, Michigan is not one of them. Michigan law eliminated common-law marriage with the passage of MCL § 551.2 in 1956, which requires a license for a valid marriage. A "common law" marriage is one that is legally recognized after a cohabitating couple, intending to be married, holds themselves out as married.
Michigan will only recognize a common law marriage in two limited circumstances:
- If a couple had already legally entered into a common-law marriage before the law eliminated them on January 1, 1957, or
If a couple legally entered a common-law marriage in a state that permits it.
If you and your partner aren't legally married but would like to ensure that you inherit one another's estates, speaking with a Michigan trusts and estates attorney is your best option.
Concerned About Spousal Rights and Whether You Should Adjust Your Estate Plan?
As you can see, once you have a will or an estate plan in place, it's important to keep adjusting it as your life changes. When you divorce, remarry or have children without adjusting your estate plan, you may unintentionally leave a loved one without enough support. Moreover, because Michigan law can circumvent your intentions, it's important to discuss your wishes with an experienced trusts and estates attorney. A comprehensive estate plan, periodically updated at important life milestones, can ensure that you can provide for your family if something happens to you.
If you're ready to put an estate plan in place or update a current one, it's time to seek the guidance of an experienced professional. At Great Lakes Family Probate & Estates PLLC, our skilled team can help ensure your estate plan exercises your wishes and maximize the estate you'll leave to your loved ones. We've been helping our Michigan clients through complex estate planning issues for years. We can help you too. Give us a call at 888-554-5373 or contact us online to set up your consultation.