Living trust and divorce

Death while Divorce Pending: Does a petition for the dissolution of marriage affect a living trust if the creator of the trust dies before the final decree of dissolution of marriage? Will the surviving spouse still get what was left to him under his wife's living trust?

Lets start with a general discussion of some of the concepts you should be aware of.

• Trust Language: What does the revocable trust say? Some trusts provide that if there is a separation (not even a divorce, just a separation) that the separated spouse gets nothing, or the least permitted by state law). So have a local estate planner read the document and advise you on what it does.
• Funding: Was the trust funded? If all of ex-wife's assets were transferred (funded) in the trust then if the trust governs there are assets that could be subject to the terms of the trust. If no assets were transferred to the trust then in the event of death the state intestacy laws (the laws that govern what happens to your assets if you die without a will) might govern instead. The laws of intestacy will address the implications of a divorce.
• Change Documents: Will your wife (ex-wife-to-be) change her will and revocable living trust? Her lawyer may advise her to revise her documents to cut you out (or to give you the greater of what state law requires or what the divorce agreement provides for).
• Property Settlement Agreement: Most if not all divorce agreements address property settlements so if the divorce if finalized even if the trust is not yet changed (many people wait until the divorce is closer to finalization or finalized to avoid several revisions of their documents) so if it does that may be what governs.
• Spousal Right of Election: Most states have provide by law (statute) that a surviving spouse is entitled to a minimum percentage of a deceased spouse's estate. This right is called a spousal right of election. If you die will married, it will be a question of state law as to whether the spousal right of election has been terminated as a result of the progress of the divorce. If the divorce was finalized, then the spousal right of election will have terminated. Whether filing for divorce, or signing an agreement when the divorce has not been finalized will affect this right is a matter of state law. Another issue which might be relevant, and which will also depend on your state's laws, is whether funding a living trust will remove the assets from the reach of the spousal right of election. if it does then the terms of the trust will govern. If it doesn' then the spousal right of election if still applicable, may apply.
• Court: If your spouse dies before a divorce if finalized and the property settlement agreement that is near final form reflects that all her assets should be distributed to her children from a prior marriage (for example) and the living trust provides for a distribution to you as her husband, its a good bet that her kids will sue if there is any basis whatsoever to do so to argue that the trust should be overturned. So even if the law is on your side that won't assure you that there wont be a legal battle.

So the bottom line is that you should protect yourself by negotiating expressly what the arrangements should be in the property settlement agreement and reviewing the issues with your matrimonial attorney and an estate planner (you need both as they are different specialties). Your ex-wife-to-be will likely review her documents and planning with her counsel so don't assume she wont take steps to limit your rights.