For most people, the finalization of a divorce feels like an ending. But it is also a new beginning. Don’t let your old and outdated estate planning documents control your new life. They may tie you to a past you have left behind—in ways you never intended or wanted. If you do not already have an estate plan, creating one now, after your divorce, is essential.
WILL & REVOCABLE TRUST
Unless your will or trust provides otherwise, divorce automatically revokes your former spouse as beneficiary under the terms of your will and revocable trust. It also revokes any provision of the will granting your former spouse a power of appointment or naming the former spouse as a personal representative of your estate. After a divorce it’s imperative to update your will and trust to clearly identify your new beneficiaries and those you want to serve in a fiduciary capacity. In addition, you need be certain that your will and trust are fully consistent with the terms of your divorce judgment.
BENEFICIARY DESIGNATIONS
It is important to understand that many assets pass outside of your will, typically by beneficiary designation or survivorship elections. Examples of these non-probate assets include joint bank accounts, retirement accounts, annuities and life insurance policies. While Massachusetts law eliminates the beneficiary designations of your former spouse and, upon divorce, treats your former spouse as having predeceased you, this law may be preempted by federal law for any retirement plans governed by ERISA and other federally provided benefits. In other words, with certain non-probate assets, it’s possible that your former spouse can inherit the asset upon your death if the beneficiary designation has not been changed after the divorce. As a result, you should review and modify all beneficiary designations as part of your divorce estate planning. Additionally, you may be required to maintain life insurance for the benefit of your former spouse, particularly if you pay alimony or have unemancipated children to support. You will need to ensure the beneficiary designations satisfactorily address your obligations under your judgment of divorce.
HEALTH CARE PROXY & POWER OF ATTORNEY
If you did not name a new agent under your power of attorney or health care proxy while your divorce was pending, those documents should be revised as part of your post-divorce estate planning. You want to be certain that you’ve named the appropriate person(s) to make significant medical and financial decisions for you in the event you cannot make those decisions due to an impairment or inability to communicate.
MINOR CHILDREN
If you have minor children, your estate plan probably names your former spouse (the other parent) as guardian of the children in the event of your death. After the divorce, you may wish to name someone other than your former spouse as guardian of the children if you die while they are under the age of 18. While, in most situations, the surviving parent will become the sole guardian of the children, if the surviving parent is unable to serve or is determined unfit to parent, the court will appoint a guardian, and it is helpful to the court to know your wishes.
In addition, it is important to review your estate plan to be sure that if your former spouse becomes the guardian of your minor children, he or she does not have automatic access to the funds designated for your children. You may consider creating a trust to fund the children’s expenses, including their college education, in the event of your death.
FAMILY MEMBERS’ ESTATE PLANS
Finally, if your parents or other family members have estate plans that include you, your children or your former spouse, those estate plans should be reviewed as well. Their plans may need to be amended to protect their assets from your former spouse.
If you are divorced and do not have an estate plan, now is the time to create one. Without one, the Commonwealth will decide how your assets are to be distributed after you die. An estate plan will ensure that your assets are distributed the way you intend and will provide you with peace of mind as you embark on this new chapter in your life.
