On their own, divorces and estate planning efforts are uncomfortable; when they’re combined, it takes on an entirely new meaning. Both of these events symbolize endings, after all. While estate planning helps prepare you and your family for the ultimate end, divorces were never supposed to be part of a family dynamic. No one marries with the goal of divorcing. Toss money and other assets into the mix, and well, it can quickly lead to the worst in human nature: pride, anger, grief.
When Estate Planning and Divorce Reveals Other Legal Vulnerabilities
Divorces also trigger a certain urgency in many of us that remind us to get our other important life decisions made, too. Preparing our wills, living trusts, naming executors for powers of attorney – these are all important elements of an estate plan and unfortunately, they can also play a role in how a divorce plays out.
As estate planning attorneys, we have a responsibility of helping our clients find the best path for their own plans, whether our client has been happily married for four decades or if a newlywed comes in who also happens to be going through a divorce, our focus remains the same: a commitment to our client.
With that in mind, we thought we’d pass on a few important considerations you might wish to consider should a divorce be in your near future.
Across the Board Changes
One of the important elements in a divorce is changing our legal documents. You will likely need to revise your will, change your beneficiaries and life insurance policies and then there are the retirement accounts. A divorce can change all of that in dramatic and permanent ways. You’ll want to consult your estate planning lawyer at some point so that you know the details of those legalities.
In some states, the law requires a former (or nearly former) spouse to be excluded from the date of the divorce. That may seem like a good thing, but remember, if you’ve not covered those bases by naming new guardians or executors or beneficiaries, your entire estate lays vulnerable.
Ah, and then there are the new chapters in our lives. You might remarry. Your former spouse might remarry and while it’s generally not a concern, if you have children, you do have an interest in how wills and insurance policies are drawn.
One question estate planning lawyers hear often is what happens with property that is jointly owned? Again, the laws differ from state to state. What you might have done in one state may not play a role in what you do now that you’ve relocated to New York. There are survivorship rights that you’ll need to work out, too. In some states, survivorship rights don’t transition to survivors who are also ex-spouses.
What about your retirement plan? How is your 401(k) designated? Federal laws play a role in these details; specifically, your spouse could remain the beneficiary. Federal laws trump state laws in most instances. If your beneficiaries take it to court after your death, they may not be successful in their efforts. It’s why close attention should be paid to retirement accounts ahead of time.
Of course, we’ve barely scratched the surface, but hopefully, it’s given you something to think about if you are currently going through a divorce. You’re not truly free until your estate planning efforts are adapted to your new life.