Getting divorced can be a stressful and time-consuming process. For most clients, divorce proceedings involve spending a lot of time collecting financial records and scouring e-mail accounts and social media for relevant documents and information. It is therefore not surprising that, in the course of the process, most people either ignore their estate plan completely or put off the issue until the divorce is resolved. In this article, we will discuss the importance of consulting with an experienced estate planning attorney early on in the divorce process.
Married individuals will often have an estate plan in place that includes a will leaving their entire estate to a spouse and one or more powers of attorney that designate the spouse as having authority to act on financial and medical matters. For couples without a will, Virginia’s default rules provide that the entirety of the estate goes to the spouse, unless there are one or more children not from the marriage, in which case the children receive two-thirds of the estate and the spouse receives one-third. For those in a happy marriage, the foregoing arrangements are usually acceptable.
However, when things turn sour, most people are not comfortable with the idea of their soon-to-be former spouse receiving the entirety of their estate or having the legal right to make important financial and medical decisions under a power of attorney. Moreover, it comes as a surprise to many people that the mere act of physically separating or filing for divorce is not sufficient to invalidate a will or to circumvent Virginia’s default inheritance rules for those without wills. The impact of filing for divorce on other items, such as general powers of attorney, medical powers of attorney, and beneficiary designations on life insurance policies, bank accounts, and retirement accounts, varies depending on the specific provision of the law that applies.
It is true that the entry of a final divorce decree will typically result in the former spouse being automatically removed from an existing will or power of attorney. However, given the length of time it sometimes takes to obtain a final divorce decree, it is not advisable to simply wait until the conclusion of a divorce case to address estate matters. In addition, the entry of a divorce decree may not have the effect of removing the former spouse as beneficiary on all relevant accounts. For example, some assets governed by Federal law – such as 401(k) accounts, thrift savings plans (“TSP”), or Federal Employees’ Group Life Insurance (“FEGLI”) – may still require an affirmative act to remove a former spouse as beneficiary even after a divorce is finalized.
Moreover, the mechanism by which a former spouse is “removed” from a will upon the entry of a divorce decree involves treating that former spouse as having predeceased the maker of the will. Depending on how the will is drafted, this may not be acceptable and may, for example, result in the children of the former spouse from a different relationship inheriting that former spouse’s share. Because most wills are prepared in a way that requires the entire will to be read as a whole in order for it to function correctly, simply “removing” a former spouse from a will by operation of law while leaving the rest of the will in place can often lead to undesired outcomes. It is therefore advisable in most cases to conduct a full review and revision of any estate planning documents to ensure that they accurately reflect your wishes in the post-divorce context.
Despite the importance of having your estate plan reviewed and revised as soon as possible after it appears that a divorce may occur (e.g., upon separation or the development of irreconcilable differences), it is just as important that any changes to your estate plan are consistent with your overall strategy relating to the divorce. For example, a separation agreement or Court order may place limitations on your ability to make changes to beneficiary designations, or you may wish to structure your estate plan to address property that you are likely to lose or acquire during the divorce. In addition, there may be agreements that can be reached between the parties prior to the entry of a final decree that would facilitate the modification of estate plans.
For these reasons, it is beneficial to work with an integrated team that will help you address both the specifics of your divorce matter as well as your estate plan in a coordinated and effective way. Weisberg & Weisberg‘s family law and estate planning attorneys work closely together to ensure that all relevant issues are considered and that a unified and effective strategy is developed to address such issues.
Weisberg & Weisberg can help you address the following common issues that arise at the intersection of family law and estate planning:
· Can I completely disinherit my spouse before a divorce is final and, if not, what portion of my estate can my spouse claim?
· If I do not wish for my spouse to have custody of my children in the event of my death, can I address the issue through the use of a will or other estate planning technique?
· After the completion of my divorce, are there any additional steps I need to take to make sure that my former spouse does not receive any portion of my estate?
· If a temporary Court order has been entered or I have signed a separation agreement with my spouse, is there any limitation on how I can modify my estate plan while the divorce is pending?
· How can I ensure that my spouse will not be allowed to make medical decisions for me, including with regard to the use of life-prolonging measures and “end-of-life” care?
If you have a family law or estate planning matter, please contact Weisberg & Weisberg to learn how we can help.