Estate Planning and Divorce

Some marriages end, and when they do Estate Plans must be altered. Estate planning after divorce is vital as is estate planning during divorce. By legal default, until the divorce is final your spouse is still considered as being in charge of various aspects of your life. Even after the divorce, if your documents remain unchanged your spouse might be named as receiving assets at your death or as having the power to manage your assets. If you have children, at your death the money you leave to them might fall under your ex-spouse’s control. We are happy to walk you through your options in person, feel free to call us! Meanwhile, here is a short introduction to some typical estate issues that arise when addressing estate planning and divorce.

Estate Planning Documents You Should Review During Divorce

As soon as you have started the divorce process, review these estate planning documents:

Financial Power of Attorney: A legal separation during divorce does not negate a Power of Attorney. It is now time to revoke and replace any power of attorney you have given your spouse.

Medical Power of Attorney and Living Will: While you remain married, any Medical Power of Attorney or Living Will stays in power. Further, unless you have selected someone else as your Surrogate for medical decisions, your spouse likely remains the default person granted power to make your medical decisions. Who selects your doctor if you become incompetent during divorce? Who has the right to refuse medical treatment during the divorce? It is now time to sign a Medical Proxy naming someone else as your Medical Power of Attorney.

Estate Planning Documents You Should Review After Divorce

Irrevocable Life Insurance Trust: If your divorce agreement requires life insurance, an ILIT is an excellent tool. A common problem with divorce life insurance is that the insured owns the policy and then refuses to share information with the other spouse. Sometimes, unknown to the children and non-insured spouse, the insured even names someone else as beneficiary. The trust owns the life insurance and can designate both parents as Co-Trustees. This way, both can confirm the policy exists and names the trust as beneficiary. Further, both can confirm premium payment is current.

Will: Without a Will, the state decides where your assets pass at death. If you don’t have a Will or Estate Plan after your divorce, if your children are minors your assets may fall under your former spouse’s control. Without a Will the state provides no protective trusts and disregards your wishes. A properly drafted Will after a divorce ensures your assets provide for your child’s care and you pick the trustee.

Changing Beneficiary Designations: Life insurance, IRAs, annuities, and other financial instruments have beneficiary designations unaffected by your Will. Review all of these designations as part of your after divorce estate plan. Estate planning after your divorce will help make sure your spouse doesn’t receive assets at your death.

IRA Trusts: Your former spouse may gain control over your qualified plans (IRAs, 401Ks, TIAA=CREF, etc.) if your minor children are beneficiaries. Furthermore, if not sheltered in a trust, these plans are available to your children’s creditors and spouses. A thorough estate plan after divorce includes reviewing these beneficiary designations. An option is creating IRA Trusts and appointing a neutral trustee to control your minor child’s inheritance.

Financial Power of Attorney: If you are unable to make decisions for yourself because of some accident or medical issue, who makes your financial decisions? After your divorce, it is time to assess who you trust with this responsibility. Name a trusted Agent under Power of Attorney.

Medical Power of Attorney and Living Will: Who selects your doctor if you become incompetent? Who has the right to refuse medical treatment? A new Medical Power of Attorney should be part of your estate plan after a divorce.

Temporary Guardianship Document: Working with your former spouse to determine who should have emergency powers for child care is an important part of your post-divorce estate plan. If you become incapacitated, but your child needs medical attention, a separate document appoints a Temporary Guardian who steps in to make medical decisions and takes custody of your child until you recover. For example, if you are in a car accident causing a coma and the other parent is on vacation overseas, this Temporary Guardian can authorize the doctors to treat your child, and this is the person who takes your child home from the hospital. If your former spouse is unavailable, who makes these important medical decisions?

Babysitter Medical Authorization: When both parents are unavailable, this document authorizes the caregiver to approve your child’s medical care. As part of your post-divorce plan, an agreement between your ex and yourself on who has powers to provide care is important.

What Happens If You Don’t Have an Estate Plan?

Intestacy, Having No will at Death: If you have no plan, then your assets pass under the State’s plan. Also, without a Will, there are no protective trusts for your children. Until you divorce, your spouse receives a share of your estate, even if your separation has lasted decades. Assets that pass to your minor children may well come under your ex-spouse’s control. The Intestacy Rules do not take your wishes into consideration. A Will allows you to craft a plan that reflects your real desires.

• Read more about the Pennsylvania Intestacy Rules.
• Read more about the New Jersey Intestacy Rules.

Common Questions About Estate Planning And Divorce

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If you have any questions about estate planning and divorce issues, please contact our office to schedule a free consultation. For more than two decades Klenk Law has focused only on Estate Law. We’ve seen it all, and this experience allows us to explain the process clearly and concisely. We make it easy for you to understand estate planning so you can make the best decisions for yourself and your family.