Most people understand that estate planning documents prepared during a marriage are no longer applicable after a divorce. But few think about the possibility of death or disability during the actual divorce proceedings. Depending on the circumstances and the size of the estate, it might be wise to discuss the issue with legal counsel while the proceedings are underway, especially if there is no estate plan at all in place.
In the event of an intestate death, Michigan courts will determine who inherits and a surviving spouse could receive a significant portion of the estate. Most divorce attorneys will identify and discuss the potential for harm with their clients and make appropriate recommendations which may include some emergency estate planning.
Post-Divorce is an excellent time to visit an estate planning attorney who can execute a plan that protects you and your family in the event of disability or death. Divorced individuals should be especially aware of the unintended consequences that could result if you have not legally specified persons to represent your interest.
We warn newly divorced persons to change the beneficiary designation on all life insurance, annuities, savings bonds and retirement accounts. Yes, that IRA or 401 (k) is still titled in your name alone but you must make a specific request to the plan administrator to change the name of the beneficiaries. Even if you have a new estate plan you must still do this because as contracts, the beneficiary designations take precedence over wills or trusts.
If a divorced individual dies without a Will or a Trust, you might assume his or her children would inherit the assets. They probably would, but if they are minors, it is likely the ex-spouse – their natural guardian – would control those assets until they reach the age of majority. This may not be a problem for some families, but it might not be the plan you would endorse.
A divorced person who suffers a serious disability without having named a personal representative may face consequences of a different sort. Court proceedings would be held to name a conservator to handle your financial affairs, a costly and unpleasant event you can avoid with a strong Durable Power of Attorney.
And finally, everyone should consider the execution of a Healthcare Power of Attorney. This responsibility would have fallen to your spouse during your marriage. Take the time to identify a relative or close friend whom you trust to make health care decisions on your behalf when you can no longer make them yourself.
If you are contemplating a divorce or are newly single, please contact us to discuss your situation and we can make recommendations that are suitable for your individual circumstances. And should you remarry, know that your spouse might inherit assets that were meant for your children if you do not make alternate plans.