After a divorce, you most likely want to move on and leave that relationship in the past, but that can be hard when you have estate planning documents with your ex-partner’s name on them.
If you’re going through a divorce, remember to update your will and other estate planning documents to make sure your arrangements will be carried out — and your assets will be distributed — according to your latest instructions.
Reasons why you should revise your estate plan during and after divorce
First, you may wish to revise your plan immediately to prevent your spouse from inheriting or gaining control over your assets if you die or become incapacitated before the divorce is final.
Second, although a divorce judgment or settlement automatically extinguishes certain of your former spouse’s rights, some documents must be modified to ensure he or she doesn’t receive unintended benefits.
Third, when you originally crafted your plan, you likely centered many of its strategies around your spouse.
Who’s next in line for your wealth?
Unless you wish to provide your soon-to-be former spouse with an inheritance, amend your will and any trusts to minimize or eliminate him or her as a beneficiary.
In addition, unless you’re comfortable with him or her administering your estate or trust, you should designate someone else as executor or trustee. This is a good idea even if you live in one of the states where divorce automatically nullifies any gifts or bequests to an ex-spouse and automatically revokes an appointment of a former spouse as executor or trustee.
Why you need to remove your former spouse as beneficiary
There are several reasons for this. First, if you die before the divorce is final, even if you have lived separately for some time, your spouse will still inherit in accordance with your will or revocable trust, and his or her appointment as executor or trustee likely will stand.
Second, the laws in some states treat your estate plan as if your former spouse had predeceased you if you are living separately and are in the midst of divorce proceedings. If you’ve named contingent or residual beneficiaries, any property your estranged spouse would have received will go to them. If not, the property will pass according to the laws of intestate succession. But relying on these laws can be risky.
Finally, keep in mind that in many states, as long as you’re legally married, your spouse will retain elective share or other property rights to a portion of your estate. So while updating your plan soon after you decide to divorce can reduce the amount your spouse will receive if you die while you’re still married, it can be difficult to disinherit him or her completely before the divorce is final.
What you should review and consider updating
Powers of attorney
If your now ex-spouse’s name is on any of your power-of-attorney documents, you will likely want to replace him or her with someone else — unless your divorce is mutually amicable, you intend to stay in one another’s lives, and you both truly want to retain the power of attorney arrangement.
You can actually update your powers of attorney even before the divorce is final. If your divorce is contested and your soon-to-be ex is hostile (or simply wants a permanent end to your relationship), you would be prudent to update your powers of attorney as soon as either of you are adversarial, before you file for divorce. You do not want a spouse that you are not aligned with moving or controlling your assets.
Healthcare
In addition to updating your healthcare power of attorney (which likely designated your spouse to make medical decisions for you if you become incapacitated), be sure you update your Health Insurance Portability and Accountability Act (HIPAA) authorization, which gives healthcare providers the ability to share information about your medical condition with your spouse. As with your powers of attorney, your HIPAA authorization can be updated as soon as either of you deems it appropriate or necessary. You need not wait to file for a divorce.
Last will and testament
Under Virginia law, divorce or annulment essentially nullifies your last will and testament, revoking “any disposition or appointment of property made by the will to the former spouse.” (See Code of Virginia § 64.2-412.) If you had named your spouse as executor of your will, divorce also nullifies that arrangement.
However, there are some other items in the will you need to consider changing. One major example of this is child custody. If you have sole custody of your children and do not wish your non-parental ex-spouse to gain custody after your death, you need to state that in your will. If your ex-spouse is the parent of the children, he or she will normally be the next custodian of the children notwithstanding your selection of a guardian, unless it is determined that he or she is unfit.
A revocable living trust
Any trust should also be reevaluated after a divorce. Usually, it is best to start over and create a new revocable living trust. Provided the trust is properly drafted, this will prevent your ex-spouse from controlling the assets of any minor children for whom you share custody.
Beneficiary designations
If you designated your spouse as your beneficiary on any insurance policies, bank accounts, retirement accounts or other assets, you will need to change your beneficiary designation individually on every policy and account. Getting a divorce does not necessarily automatically remove an ex-spouse from that role.
If you would like to make your minor children your beneficiaries, you should set up a trust for that purpose and designate the trust as beneficiary with the minors as the beneficiaries of the trust. Otherwise, minors need a guardian in order to be named as a beneficiary, and a court could actually appoint your ex-spouse as their guardian, in effect making your ex-spouse your beneficiary.
Consult an attorney
When changing your estate documents while contemplating a divorce, or during or after a divorce, it is important to consult an attorney for help. Jason Smolen and Dan Ruttenburg are both experienced estate planning attorneys who are prepared to help you navigate this process.
Contact Jason Smolen at jdsmolen@smolenplevy.com and Dan Ruttenburg at dhruttenberg@smolenplevy.com.
About the Authors
Jason Smolen
Jason Smolen is a founding principal of SmolenPlevy. Smolen’s knowledge of complex estate and business issues has drawn the attention of ABC News, USA Today, E! Online, Realty Times and the Bank of America Small Business Online Community. Mr. Smolen is a graduate of the City College of the City University of New York and the George Mason University School of Law. Smolen also serves as a board member of a local citizens association and recently co-authored an article titled Why You Should Think About Spousal Limited Access Trusts (SLATS).
Daniel H. Ruttenberg
Daniel H. Ruttenberg, JD, CPA, LLM is a principal with the firm. Mr. Ruttenberg received his Bachelor of Science degree with a double major in Accounting and Finance from the University of Maryland. He earned his Juris Doctor with Honors from George Mason University School of Law and his Master of Laws in Taxation with Distinction from Georgetown University Law Center. Mr. Ruttenberg also served as the Director of the Fairfax Bar Association (FBA) for seven years. During this period, he was also elected president – the youngest in FBA history and served as a member of the Board of Directors for the Fairfax Law Foundation.
