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Post-Divorce Estate Planning

| Apr 23, 2020 | Estate Planning |

For a married person, going through a divorce changes many aspects of his or her life. Often the person must look for a new place to live. He or she may have to change their bank and other financial accounts. Addresses for bills and other important mailings will need to be updated. If there’s a return to the person’s maiden name, driver’s license and passport will need to be reissued. These types of changes are compelled by the circumstances and are often something that the person facing divorce has no choice but to address.

However, in the face of divorce, a vitally important but often overlooked step is to update one’s estate documents. Most married couples list their spouse as the primary person on basic estate documents such as a Will, Trust, or Durable Power of Attorney. When they get divorced, they should update and make changes so that they have the right person(s) in place. Not doing so can cause confusion at best and disaster at worse! Imagine if a husband or wife has a Power of Attorney for Healthcare and they name their spouse—after divorce, would they really want their “X” making medical decisions for them? Worse yet, if there’s a Declaration of Living Will, would he or she want their “X” making end-of-life decisions for them?

Another major concern involves a divorcing person who has minor children. If he or she does not plan well, their “X” may end up controlling money or other assets which are intended for their children. An example may help. Charles and Lisa have two minor children and are getting a divorce. Once the divorce is finalized, Lisa will have assets worth about $350,000. If she dies and does not have a Trust with a proper trustee designation in place, a guardianship of the property will need to be established for each child. Guess who likely would end up being the designated guardian—Charles! If Lisa doesn’t mind her “X” controlling her money after she’s gone, then there’s no problem. However, in our experience, this would rarely be the case! If Lisa establishes a Revocable Living Trust to hold the assets for the children, she can name the Trustee and avoid the guardianship of the property altogether. This allows Lisa’s asset to be available for the children but avoids Charles being the one in control.

There’s another reason a divorce should prompt action. Many married couples list their spouse on beneficiary designations. This includes things like life insurance, annuities, and retirement accounts (e.g. IRA or 401K). While Florida has a statute that nullifies these beneficiary designations after divorce (Section 732.703, Fla. Stat.), the designations should still be changed in the face of divorce. Not doing so can cause nothing but confusion and problems in the future.

When a married person is getting divorced, they should seek counsel from an experienced estate planning lawyer. Many divorce lawyers, at their own admission, do not handle this type of representation. Just as you would not go to an estate planning lawyer for your divorce, you should not go to a divorce lawyer for your estate documents.

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