You have recently divorced your spouse, and the judge has signed the divorce decree. Now what? Although you may feel as though you have spent enough time and money on lawyers, there is one last attorney you need to talk to: an estate planning attorney. Suppose you and your former spouse had previously done estate planning together. In that case, you must come in and make changes to avoid having your hard-earned money and property distributed in a way you did not intend when you pass away. If you have not done any planning, now is the perfect time to get your affairs in order.

When you meet with the estate planning attorney, you must bring all necessary documents, including a copy of your divorce decree. This document will help determine the obligations that need to be specified in your documents, the accounts or property you currently own, and how you hold those accounts and property.

What Is in a Divorce Decree?

Support obligations

Spousal or child support obligations may necessitate purchasing life insurance should you pass away before fulfilling the entire obligation. If there is a child support obligation, it may be wise to have the life insurance policy owned by a trust, allowing distributions to the minor children by a trustee instead of a lump sum payout to your former spouse, who may or may not use the funds as intended. (If this is not incorporated into your decree, make sure your former spouse agrees to this strategy!) 

Property Division

The divorce decree will also contain a section on the division of your marital property. This information is helpful to provide to the estate planning attorney, as it presents an accurate picture of your current property and financial accounts.

In addition to identifying the accounts or property you now own, how you own them is incredibly important. Ownership of accounts or property previously held by you and your former spouse as joint tenants or tenants by the entirety has likely changed to ownership as tenants in common under state law. This is important because before your divorce, if you had passed away, your now former spouse would have likely received your interest in the account or property automatically. However, now that the ownership has changed to tenants in common, when you pass away, your interest will go to your heirs. If you don't do any planning, the interest will be transferred according to state law, which may not coincide with your wishes. As part of your estate planning, you can choose who will receive your interest and how they will receive it.

What Effect Does the Divorce Decree Have on an Existing Estate Plan?

Last Will and Testament

Depending upon the state in which you live, divorce can have a varying impact on your will. In some states, a divorce revokes all provisions in your will that benefit your former spouse. Additionally, some state laws,  also revoke the appointment of your former spouse as the personal representative. In other jurisdictions, a divorce revokes the entire will. Should you die before executing a new will, the law will determine who receives your money and property. Even if the gifts to your former spouse are revoked, the law may or may not revoke gifts you made to your former spouse's family, making it very important to revise this document as soon as possible to incorporate any changes you wish to make. 

Revocable Living Trust

Similar to wills, the laws regarding what happens to a provision in a revocable living trust vary. Some state laws revoke all provisions relating to the former spouse, while others leave the trust intact. Suppose you and your former spouse previously had joint planning. In that case, it is essential to review it and make any desired changes, as wills and gifts to your former spouse's family as beneficiaries of a trust may or may not be revoked as a result of the divorce. 

Financial Power of Attorney

In some states, filing for divorce revokes the former spouse's appointment as agent (the person who would act on your behalf) under a financial power of attorney. However, in other states, a divorce does not revoke your spouse's ability to act as your agent. Regardless, suppose there are any outstanding powers of attorney with third parties. In that case, it is essential to inform them of your divorce and provide them with a revocation, so they are aware that your former spouse is no longer authorized to act on your behalf.

Medical Power of Attorney

Like other estate planning documents, state laws vary as to whether or not your former spouse will still be able to make medical decisions for you if you are unable to make or communicate them yourself. Some states will revoke the designation of your former spouse as your agent for medical matters as a result of the divorce, while others do not. Regardless, it is crucial to keep this document up to date and provide it to the relevant healthcare professionals.

Life Insurance

Because a life insurance policy is a contract with a third party, a divorce can sometimes complicate things. If you named your former spouse as a beneficiary of the policy before your divorce, state law varies as to whether that designation is automatically revoked. Even if the designation is revoked under state law, it is essential to update the beneficiary designation so that the company is aware of your wishes. In some cases, although the former spouse is no longer entitled to the life insurance proceeds, if they were not informed, the benefit will be paid out to the named beneficiary (former spouse), and it will be the responsibility of the rightful beneficiary to sue and collect the proceeds from the former spouse. This may not be an issue in some instances, but in others, it could create avoidable drama.

Retirement Accounts

For accounts governed by the Employee Retirement Income Security Act of 1974 (ERISA), the designation is not automatically revoked. To ensure that your former spouse does not receive the benefits, you must affirmatively change the designation, provided that your divorce decree does not state otherwise. 

You Need An Estate Plan Now More Than Ever

It is always important to confirm that your estate plan mirrors your current estate planning objectives.  This is especially important as major life changes alter previous planning goals.  As a newly single person, you are now in complete control of your money and property. Without an estate plan in place, the state laws will determine what happens to your hard-earned money and property. If you already have estate planning documents in place, you need to review them when circumstances change, such as in the event of divorce. Even if gifts to your former spouse are revoked under state law, you need to make sure that the alternate plan built into your documents is still what you want. Give us a call today so we can schedule an appointment to protect your new future and those you love. Don't forget to bring the divorce decree.

Contact Hartmann Law Today

If you have questions about estate planning and divorce, contact our office to speak to an estate planning attorney.

Take steps to start your Life and Legacy planning today!  Take action to ensure your voice is heard when you are unable to speak for yourself.  Make the decision to protect yourself, your loved ones, your business, and your property.   

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