Posted on June 19, 2017 by Carol Hill
If you’re currently weathering the stress of a divorce, the last thing you may be thinking about is updating your estate planning documents. Your divorce can have a major impact on your estate plan, however, with implications for you, your children, and those who depend on you. You should consider making the following updates to your estate plan with the help of an experienced estate planning attorney:
1. Make a New Will. Under Washington law, provisions of your Will favoring your ex-spouse are revoked automatically when your divorce is final. This is a good safety net, but it is best to make a new Will right away to remove your spouse and make other changes before the divorce is finalized. For example, a Washington court recently held that provisions of your Will in favor of your ex-spouse’s relatives will not be revoked automatically upon divorce. If you want to change those provisions, you must make a new Will.
2. Choose a Trustee to Manage Your Children’s Inheritance. It is common to create a testamentary children’s trust in your Will naming one or more trustees to receive, manage, and distribute the assets of your estate for the benefit of your children when you die. If your Will already creates such a trust involving your ex-spouse, you must decide whether you want them to have access to the funds that you are passing to your children. You should update your Will to reflect your specific wishes on this issue and to ensure that your children’s trust is set up in the manner you prefer.
3. Update Your Choices for Guardian. While the guardian provisions in your Will cannot override your ex-spouse’s parental rights, it is important to state your guardian preferences for your children in the event no parent is available. Making a new Will also allows you to update prior guardian provisions that you now want to change due to your divorce.
4. Change Beneficiary Designation Forms for Life Insurance and Retirement Accounts. Beneficiary designations in favor of ex-spouses on certain non-probate assets such as IRAs and life insurance policies are revoked automatically when your divorce is final, while designations for other assets, such as 401(k) Plans, are not revoked automatically. If your ex-spouse is the designated primary beneficiary of your 401(k) Plan, for example, unless you name a new primary beneficiary, they will inherit that entire account, even to the exclusion of your children, despite the fact that the ex-spouse was designated prior to the divorce. You may wish to change all of your retirement and life insurance beneficiary designations during your divorce, however be sure to speak with legal counsel before doing so as not to run afoul of any court-imposed limitations or requirements while your divorce is pending or as may be otherwise imposed under the terms of your final divorce orders.
5. Make New Powers of Attorney for Finances and Health Care. Any power of attorney rights you have granted to an ex-spouse prior to a divorce, including health and financial rights, are revoked automatically when your divorce is final. Unfortunately, that revocation is not reflected on the power of attorney paperwork and may cause problems with financial institutions or medical facilities. It is best to update the documents to reflect your current choices. In the event you would like your ex-spouse to have a role in helping manage your finances or health care if you are incapacitated, you must explicitly name them in a power of attorney document executed after the divorce is final, otherwise they will be excluded by the automatic revocation provision discussed above.
6. Retitle Assets and Ensure Proper Alignment of Liabilities. Once your property settlement is finalized, it is important to make sure title to assets and liability paperwork for debts reflect the terms of your divorce. For example, if you were awarded property, you may want have the property retitled in your name alone or , if your ex-spouse is now responsible for a joint debt, you want to have yourself removed from the loan documents in case he or she stops making payments. This advice applies to real estate, life insurance ownership, retirement accounts, joint tenancies, and all other joint debts and obligations that were divided in the divorce. Again, be sure to discuss these concerns with counsel in advance of finalizing your divorce as having language in your final divorce orders as to how and when these sorts of actions will occur can greatly streamline the process.
While thinking through the above issues is a good place to start, you should always work with an experienced estate planning attorney to help you navigate these types of changes. If your divorce is not final, you should also consult your divorce attorney and proceed with care, as there may be court-imposed limitations on your ability to make certain types of changes. If you would like to discuss updating your Will or other estate planning documents during or post-divorce, please contact one of our estate planning attorneys at http://www.lasher.com/practice-areas/estate-planning-trusts-probate.