Going through divorce can be an overwhelming experience. But if you are divorced or considering divorce, do not forget to review and change your estate plans.
Many times, estate plans are designed under the best of circumstances. Everyone expects the marriage to last “until death do us part.” Frequently, spouses are given incredible powers and benefits with regards to our estate. When divorce occurs, or is imminent, the spouse’s powers and benefits will need to be replaced, or at least limited.
Will
Under California law, your ex-spouse is automatically barred from inheriting your property or serving as the executor of your estate. If your ex-spouse is named as your executor or residual beneficiary of your estate, you will need to make sure that your will has a successor executor and residual beneficiary.
California courts have also ruled that provisions of a will concerning children of an ex-spouse are revoked unless specifically stated otherwise. However, positive relationships with stepchildren sometimes continues after divorce. If you want to include your stepchildren as beneficiaries, you will need to make sure your will lays out your intentions clearly.
Trusts
If you have a revocable trust with your ex-spouse, you can revoke the trust either before filing for divorce or after the divorce has been completed. However, a trust cannot be revoked, changed, or a new trust funded while divorce proceedings are ongoing. Revoking a trust will not remove any community property property that will be divided but it can protect your half of the property.
Irrevocable trusts are much more complicated. You will need an attorney to review the trust and advise you how to proceed. It may require a judicial ruling to make any changes, if possible at all.
Power of Attorney
California automatically revokes a Power of Attorney power granted to an ex-spouse. However, the Power of Attorney remains in effect until the divorce is finalized. A separated spouse will still have the full access to your financial accounts. For that reason, it is always best to revoke an ex-spouse’s power under a Power of Attorney rather than waiting for the operation of law.
Advanced Health Care Directive
Unless your Advanced Health Care Directive says otherwise, your ex-spouse may still be empowered to make medical decisions. Just like your Power of Attorney, your ex-spouse’s powers under an Advanced Health Care Directive will need to be revoked and replaced.
Retirement Plans
Retirement plans are often overlooked in divorce situations. In California, IRA beneficiaries cannot be changed without a spouse’s consent. If your spouse will not consent to a change prior to the finalization of the divorce, the beneficiary should be changed immediately once the divorce is finalized. Neglecting to make the change will mean the beneficiary designations will continue to apply and an ex-spouse may receive a windfall from the retirement plan, despite the divorce.
Conclusion
These documents are just a few common documents to change. If you are recently divorced or considering divorce, you will want to review your entire estate plan. Although the California law will automatically make certain changes, you should not depend upon the operation of law to protect yourself. You should be proactive about making changes to your estate plan to reflect your post-divorce wishes.