Estate Planning and Divorce
If You Have A Will or Trust:
If you have a will or similar estate planning document, such as a living trust, your spouse will typically be designated as the executor and/or trustee, and probably is named as the primary or sole beneficiary of your estate. Clearly, you should immediately review your will or living trust with an estate planning attorney to determine if you wish to make any changes. Keep in mind that most states have an "elective share statute" which provides that your spouse (whether estranged or not) will automatically be entitled to a certain percentage of your estate. However, through proper planning, there are a number of ways to avoid or limit the assets which are subject to the elective share, and to provide that your estranged spouse does not receive more of your estate than you want him or her to. You should seek the advice of a qualified estate planning attorney to modify your will, trust and other estate planning documents.
Most of us today are "worth more dead than alive." That is because a large part of our estate consists of life insurance policies and retirement plans. Importantly, those assets, such as life insurance policies, 401K plans, IRAs and annuities, generally are not subject to your will, but instead pass to whomever you have designated as your beneficiary. People typically have designated their spouse as sole beneficiary for all such assets. Accordingly, it is imperative to immediately review all beneficiary designations and to make appropriate changes. Please note that under Federal law, your legal spouse must be named as sole beneficiary of all your company pension, profit sharing and 401K plans unless he or she agrees otherwise in writing on a form provided by your employer. Check with a qualified estate planning attorney to make sure you follow all applicable rules in naming beneficiaries of these assets.
Powers of Attorney:
If you have previously done estate planning, you have probably given your spouse a Durable Power of Attorney to handle your affairs. In the divorce context, Durable Powers of Attorney are loaded guns. There have been numerous instances where estranged spouses have used such Durable Powers of Attorney to transfer their spouse's assets to them, take out loans in the name of their spouse, etc. If you have given your spouse a durable power of attorney, you should consider revoking it immediately so that it cannot be used in an unintended fashion. Check with a qualified estate planning attorney to make sure you follow your state's rules for revoking a power of attorney. In most states, banks and other third parties can rely upon a power of attorney unless they have notice that it has been revoked. If you are concerned that your spouse may attempt to use the power of attorney without your permission, you should consider notifying all your financial institutions that the power of attorney has been revoked. It is often a good idea to record the revocation in the public records.
Your Parent's Estates:
In some cases, you may be named as a beneficiary under the estate planning documents of a parent or other relative. If that parent or relative dies while you are still married, you become entitled to your portion of their estate. If you then die before the divorce is final, your interest in their estate becomes part of your estate, and is available to your surviving spouse. Under most states elective share statutes, even if you attempt to write your spouse out of your will, he or she would still be entitled to a percentage of your estate, including your share of your relative's estate. If this is a potential concern for you, the best way to avoid the problem is to have your parents or relatives, while still living, amend their estate planning documents so that your share of their estate goes into a trust for your benefit, rather than going directly to you. You can be designated as the sole beneficiary of such a trust without it being reachable by your spouse. That way, if something happens to you while your divorce is pending, your share of the estate can pass directly to your intended beneficiaries, and not to your estranged spouse. If this situation applies to you, you should urge your parents or other relative to seek the advice of their estate planning attorney to make the appropriate changes.
Under most states laws, upon your death custody of your minor children would normally pass to the children's surviving parent (in most cases, the person you are now in the process of divorcing). Although the law clearly gives the surviving parent priority to be guardian for the minor children, the final decision is always based upon the best interests of the child. In certain cases, the surviving parent clearly is not an appropriate guardian for the minor children. For instance, the surviving parent may be addicted to drugs or alcohol, may be physically or mentally abusive, or may have other psychological or physical problems which prevent them from being a good parent. In those cases, you may want to provide for an alternate guardian in your will and clearly spell out your reasons why you believe your estranged spouse would not be an appropriate guardian for your minor children. Although the court is not obligated to honor your request, the court would certainly consider your wishes in determining what is in the best interests of the child. Because the surviving parent normally has preference as guardian of the minor children, if you want to attempt to name someone else, it is imperative that you seek the assistance of a qualified estate planning attorney to help you.
Married individuals who are considering divorce should review their estate plans to determine if they remain appropriate in light of the possible divorce. Remember that the law considers you to be legally married until the judge signs the final dissolution decree ending the marriage.
ABOUT THE AUTHOR
Brian James, President of C.E.L Associates, focuses on helping divorcing couples end their marriage as amicably as possible. His organization handles mediations for all family and community disputes. They are conveniently located throughout the Chicago suburbs and offer services in Northern Illinois and Southern Wisconsin. Brian strictly adheres to mediation services that are professional and maintain the utmost confidentiality for all clients. Helping people resolve their disputes in a non-adversarial way, Brian saves wear and tear emotionally and financially.
He can be contacted by phone at (312)524-5829 or or Visit Web Site
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