Estate Planning and Transfers in Fraud of Marital Rights

If you are married, have you thought about transferring an asset to someone other than your spouse during your life or at your death?  This is not uncommon, especially in blended families where one or both spouses have children from a prior marriage. The issue also arises in the case of inherited assets that an individual feels should remain in his or her family rather than passing to a spouse who may then leave them to a new spouse or relatives from their own side of the family. 

In Missouri, there are laws that are designed to protect married persons.  For example, there is a statute that presumes a transfer of real estate to someone other than your spouse is fraudulent.  As a result, if you convey real estate to someone other than your spouse without the express consent or joinder of your spouse, your spouse could file an action seeking to recover the transferred real estate.

Earlier this year, the Missouri Court of Appeals found that laws governing transfers in fraud of marital rights also apply to beneficiary designations on an Individual Retirement Account (“IRA”).  While applicable federal law expressly states that your spouse must “waive” their right to be your primary beneficiary on certain qualified plan benefits such as 401Ks, the federal laws do not include similar restrictions on IRAs.  Based on the Court’s recent ruling in Missouri; however, Missourians should obtain a waiver from their spouse if they wish to name anyone else as their primary beneficiary on an IRA.

Missouri courts have consistently ruled that any asset in which the surviving spouse had a marital right or interest that could have been recovered in the decedent spouse’s estate but for a conveyance or transfer during the marriage is recoverable.  It does not matter if the transfer is completed during a spouse’s lifetime or if the transfer is to be made by a beneficiary designation that takes effect on the spouse’s death. So even if you have a will, a trust, or beneficiary designations that transfer specific assets to someone other than your spouse, your spouse could bring suit and recover those assets as a transfer in fraud of marital rights unless you have the proper documents in place.

Whether you already have an estate plan in place or not, if you wish to transfer assets to someone other than your spouse, contact our office to discuss your wishes and get the “must have documents” that you need to ensure your wishes are carried out