D.I.V.O.R.C.E And Estate Planning
I came across an article posted last September in which it was stated that a survey conducted by the Institute of Family Studies found that 34% of married people reported the pandemic had stressed their relationship. https://www.fox43.com/article/news/local/post-pandemic-divorces/521-8cfca196-3aec-4e47-b831-02662fa8f17d So, it’s no surprise that divorce lawyers are busier than ever. However, getting a divorce is getting to be challenging during the pandemic because more courthouses have been closing which is causing even uncontested divorces to drag on and on. That can spell disaster for some couples.
If you are going through or considering a divorce, like so many couples of every age are today, thanks to the pandemic, one thing you’ll want to attend to sooner rather than later is updating your estate plan – if you have one. And, if you don’t have one, here’s something to consider. Keep in mind that you are by law legally married until a judge signs the final divorce decree. So, if you were to pass away before the divorce is final, your ex may be entitled to your estate if you haven’t made an estate plan. If you do have an estate plan that mentions your soon-to-be ex, your final wishes are likely different today than they were when the plan was first drawn up.
Estate Planning Actions You Can Take While A Divorce Is Pending
One thing you can and really should change before a judge signs the final divorce degree is your Advanced Health Care Directive if you don’t want your soon to be ex making critical care decisions on your behalf if something were to happen to you. Likewise, if you don’t want your spouse to be making decisions on your behalf should you become incapacitated before the divorce is final, you must change your durable Power of Attorney. You’ll want the person you assign to be someone you trust and who has some experience handling financial matters. It could be an adult child, sibling, parent, CPA or financial advisor.
You can also either prepare a new Last Will and Testament, change the beneficiaries on your current Last Will and Testament, or revoke it altogether, before the divorce is final. Once again, if you don’t have a will, now is a good time to create one—because if you pass away without a will before the divorce is final, your ex may inherit all your assets. And, if you forget to remove your ex-spouse from your will after the divorce is final, it will complicate matters for your heirs with respect to how your property is distributed according to your final wishes and likely wind up in expensive litigation. So turn your attention to your will as soon as possible.
Estate Planning Actions To Avoid During A Divorce
Now, here are a few estate planning actions that cannot and must not be taken during a divorce, unless you have the consent of your spouse or obtain a court order. First and foremost is any action that attempts to shift money or property away from a spouse ahead of a final divorce judgment is prohibited. In fact, transferring or hiding assets or property is punishable under civil code. That includes funding a new trust, revocable or irrevocable. Also, you cannot create a non-probate transfer or modify a non-probate transfer (IRA, life insurance, benefit plans, revocable trusts) in a manner that directs assets away from your spouse. When child support or spousal support is at issue, you cannot cash-out or borrow against insurance policies (life, health, disability, automobile) or cancel those policies or transfer their funds into a different account.
Take Whatever Actions You Can Now
You simply never know what may happen between now and when your divorce becomes final. So take whatever actions you can to modify your will and your estate plan. If you have questions please give us a call.