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In Michigan, when spouses divorce, they no longer stand to inherit from one another if there is no will. Even if the ex-spouse was named in a will created before the divorce, the divorce terminates that inheritance unless the person making the will specifically indicates an intention for the now ex-spouse to inherit. But what about when a couple is not divorced, but simply living apart? Does it matter that they are still legally married? In other words, can a separated spouse still inherit? The answer to that simple question depends very much on the facts of the case.
What Does it Mean to Be Separated?
First, it’s important to know that Michigan does not have what some states call “legal separation.” If a couple wants to live separately but not divorce, one person can apply for an order of “separate maintenance.” This order may provide for child support or spousal support and divide property, but does not dissolve inheritance rights or allow either party to remarry.
Is there some point at which the decision to separate should eliminate a spouse’s right to inherit from the other? The answer, according to MCL 700.2801(2), is yes. According to Michigan law, “an individual who…was willfully absent from the decedent spouse” for a year is not a “surviving spouse” for purposes of inheritance.
A recent Michigan case shed some light on what it means to be “willfully absent.”In In re Erwin, the deceased, James Erwin, Sr. died intestate (without a will) in 2012. His wife, Maggie Erwin, had lived separately from him since 1976, but the two had never divorced. Jame’s Erwin’s daughter from a previous marriage, Beatrice King, argued that Maggie Erwin should not be eligible to inherit as a surviving spouse because she had been willfully absent from James Erwin, not just for a year, but for decades.
The court found that Maggie Erwin was a surviving spouse for purposes of the statute. Although she had lived separately, circumstances showed that she and James Erwin had had an ongoing relationship, and that as recently as 2010, James and Maggie together sued James’s employer to reinstate Maggie’s health insurance coverage under his retiree medical benefits. In that lawsuit, James asserted that they had an ongoing relationship. The Michigan Court of Appeals and Supreme Court affirmed the trial court’s decision.
The take-away: while physical separation can end a spouse’s right to inherit, it does not necessarily do so.
The take-away is that while physical separation can end a spouse’s right to inherit, it does not necessarily do so. If you really do not want a separated spouse to inherit from you, you should get a divorce and, for good measure, create an estate plan afterward that excludes them. On the other hand, if you do want a separated spouse to inherit from you, you should create an estate plan that specifically includes them. Doing so will eliminate the concern that another heir might successfully argue that they were “willfully absent” and not a “surviving spouse” under Michigan law.
What About Beneficiary Designations?
The Erwin case above dealt with Michigan intestacy law. Even if someone dies intestate, that is, without a will, there are still ways that a separated spouse or ex-spouse might inherit their assets. One of these is through a beneficiary designation on a 401(k) or other retirement plan.
A recent federal case should send divorced individuals with 401(k)s scrambling to check their beneficiary designations. That case, Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, involved a couple that had divorced in 1994. The ex-husband had a 401(k) at the time of his death in 2001, but had never changed his beneficiary designation in the years since his divorce. His ex-wife remained his designated beneficiary.
Perhaps the husband thought it was unnecessary to change his beneficiary designation because his ex-wife had waived all claims to his retirement benefits in the divorce decree. Unfortunately for the man’s daughter, who claimed her father wanted her to receive his benefits, the court awarded the entire account balance of the 401(k) to the ex-wife. The court held that the beneficiary designation on file with the company controlled the disposition of account funds, not what was in a trust or will.
The take-away here is to check your beneficiary designations on all accounts (not just 401(k)s) on a regular basis and certainly after a major life change like divorce. In a worst case scenario like Kennedy, someone you want to provide for could be stripped of assets, and someone you meant to disinherit could get a windfall. But even if your intended beneficiary prevails, litigation is time-consuming and costly. You can help your intended beneficiary avoid confusion, delay, and expense by simply making sure your beneficiary designations are updated.
Can a separated spouse still inherit? Maybe—but there are steps you can take to make sure that doesn’t happen if you don’t want it to. If you have recently undergone a major life change such as separation, divorce, or marriage, we invite you to contact our law office to schedule a consultation to review and update your estate plan.
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