Divorce presents many difficult issues and decisions, and there is one more set of tasks to add to your “to do” list. You need to address your will and estate plan. It could be the will and planning documents buried deep in a filing cabinet that you and your current or soon to be ex-spouse executed 10 years ago, or the one you never got around to signing. Either way, take care of it now. While the divorce is ongoing, your current spouse still has certain rights, and when the divorce is final you want to make sure you meet your legal obligations, protect your children and exercise as much control over your life and assets as possible. Below are five things you need to do:
- Update your healthcare proxy. If you are ill or injured and cannot communicate for yourself, who will make healthcare decisions for you? Make sure you have a current health care proxy that names who you trust to make your health care decisions for you today, if you cannot communicate them yourself.
- Update your Power of Attorney. You and your spouse probably executed powers of attorney at some point. Try to remember where they are, and if you cannot, ask the attorney who may have drafted them for you. It probably gave your spouse access to all of your accounts and assets now while you are competent. This includes access to assets in your name alone. This should concern you, particularly if the divorce is not amicable. You need to revoke that power of attorney, execute a new one and possibly provide notice to your current spouse of the revocation. This is typically done through your attorney. Then prepare a new power of attorney and designate someone you trust to take care of your financial affairs if you are unable to do so.
- Changing Beneficiary Designations. In NY you cannot change beneficiary designations on life insurance policies, retirement accounts or plans—like your 401(k)—and pensions during the divorce. Those designations often must to stay in place until the divorce is final. The filing of a Summons for divorce places an automatic restraining order on your assets, which includes changing beneficiary designations. But once a divorce agreement is in place, or once the divorce is finalized, (check with your divorce attorney), you should immediately update those beneficiary designations. First make sure you are in compliance with the provisions in your divorce, and then make sure that your beneficiary designations reflect your post-divorce wishes.
- Update Your Will. Subject to any requirements in your divorce, you should update your will to reflect your post-divorce desires about how your estate should be managed, and how your assets should be distributed. Do you still want your ex-spouse in charge of your estate? Do you still want your ex-spouse to inherit your estate? You may also need to provide trust provisions in your will, or in conjunction with your will for minor children.
- Decide how much to leave your spouse even if you are not yet divorced. In most states, you cannot disinherit your spouse completely, but you do not have to leave your entire estate to your spouse. There are nuances to consider. Often clients will leave their spouse only the minimum prescribed by law, to insure that their children receive a substantial portion of their estate, even if that portion is held in trust. The choice is yours. Check with your attorney.