Divorce and estate planning go together. Not exactly like peanut butter and jelly, which some people know is one of my favorite lunch sandwiches, but they are a logical combination. As part of a divorce, individuals make a lot of financial decisions and at the end of the process, should make some adjustments to their financial planning and estate planning. I am not a financial planner, but I prepare estate plans.
Getting divorced automatically makes some default changes to your estate plan. For example, your ex-spouse is no longer considered a beneficiary of your Will or to act as executor of your estate, if it was executed prior to your divorce. Your ex-spouse is also no longer your agent under a power of attorney if it was executed prior to your divorce. The issue of whether your ex-spouse is still considered the beneficiary of your life insurance policy or retirement accounts can be a complicated issue of state and federal law.
So if getting divorced automatically changes some of those provisions, what happens? The answer of course, is “it depends.” It depends on whether you have designated alternate beneficiaries of your estate, an alternate executor, an alternate agent under your power of attorney, etc. It may mean that only part of those documents is nullified. It may mean that the entire document is nullified.
The only way to make sure your estate plan is in line with your marital status after a divorce is to either prepare that estate plan, if you haven’t already done so, or revise your existing estate plan. That generally means preparing a Will, Durable General Power of Attorney, Healthcare Power of Attorney and Living Will. You may need to re-designate your ex-spouse as beneficiary of life insurance or other assets according to the terms of your divorce agreement. If so, that must be done after your divorce is final. You may choose to designate your ex-spouse as beneficiary or executor of your estate, or as trustee for assets gong to your children, or as your agent under your power of attorney. Not everybody wants to change these designations after a divorce.
The only way to make an informed decision about changing your estate plan after a divorce is to discuss the situation with an estate planning attorney. If you live or work in the central Pennsylvania area, including Carlisle, Harrisburg, Hershey and surrounding communities and would like to discuss the relationship between divorce and estate panning or any other family law or estate planning or administration issue, please contact me.