Your Divorce and Estate Planning
It is essential to modify, change, or revoke your estate planning documents after a divorce. Also, it is important to start this process before your divorce is even final.
Most people think, “I’m going to wait until after I’m divorced to change my Last Will and Testament, my Designation of Healthcare Surrogate, Living Will, and my Financial Power of attorney.”
However, changing your estate planning documents during or before a divorce proceeding is important — because most people do not trust their ex spouse to make their financial and healthcare decisions. Divorcing people also generally want the other party to receive few, if any, of their assets after the divorce.
Ideally, when it comes to your estate plan, you want to make sure you modify your Last Will and Testament Health Care documents, and your financial power of attorney immediately upon deciding that you want a divorce. Otherwise, you risk having someone who may not have your best interests at heart making incredibly important decisions for you or for your minor children or having your wishes disregarded after you pass away.
What If Someone Passes Away During a Florida Divorce Proceeding?
According to Florida law, if someone dies during a divorce proceeding, their ex spouse is still entitled 30% of the deceased spouse’s assets (this includes the homestead). However, if you act quickly to change your estate including your Last Will and Testament which previously left all or most of your assets to your spouse, you will prevent them from taking more than what they are entitled to. If you don’t make sure to have a Last Will and Testament your assets will be probated Intestate (without a Will) and your spouse will receive 100% of your assets.
What Happens to a Living Trust in a Divorce?
If you have not already changed your Trust to reflect a different beneficiary in your estate, then your ex-spouse during your divorce, then you will need to revoke or change your Trust immediately. A court will deem any inheritance to your spouse in your Trust as invalid and will likely invalidate your entire Trust. This will impact the other beneficiaries to which you left assets. Often you can do a Trust Amendment to change the beneficiary designations and/or amounts listed in your Trust instead of creating a new Trust. If any changes are required your Attorney will advise a Revocation of your old Trust and the execution of a new one.
Divorce and Wills in Florida
When it comes to wills and divorce in your estate plan, if you do not change your Will after your divorce, Florida laws will presume that your ex spouse gets nothing. This may afford great protection for your estate, however, if your former spouse is listed in your Last Will and Testament, Florida law will view the entire Will as invalid. This may leave your other beneficiaries who you listed with nothing or cause the court to determine that you died without a will after divorce and distribute assets per Florida Law.
Estate Planning After the Divorce
After your divorce, it is essential to make sure you update your healthcare documents in your estate planning so that you list a person you trust with your life to make your decisions for you if you cannot in an emergency, or during a serious illness. If you previously listed your ex spouse, the Healthcare Documents will be deemed invalid and someone you may not have picked may be called upon to make very important decisions on your behalf.
Finally, if you have a Financial Power of Attorney (POA) that lists your ex spouse, it will be deemed invalid. If you travel frequently, are in poor health, or are elderly, a POA may be a very necessary document for you to have in your estate planning. Updating this document with a trusted individual is very important.
Your Divorce Plans and Beneficiary Designations On Financial Accounts and Life Insurance Policies
When people are making divorce plans, they should also update the beneficiary designations on their financial accounts (e.g., savings, checking, investment, and retirement accounts) and health care policies.
Keep in mind that when it comes to employer-provided life insurance policies and retirement accounts such as 401(k)s and pension plans, the federal law ERISA (the Employee Retirement Income Security Act) will override Florida state law.
Basically, ERISA law says the beneficiary of the record will receive the proceeds of your 401(k), employer-provided life insurance policy, and/or pension — even if that person may be your former spouse.
So, it is critical to immediately update these accounts and health care policies once you start the divorce process. You can call your bank, employer, brokerage, insurer, or another provider to get the necessary documents to change your beneficiary. Do this today.
Concluding Thoughts About Estate Planning and Divorce
Most individuals do not want to leave their assets to a former spouse to give them the power to make important decisions about your healthcare or finances. You must update your Estate Planning documents as soon as possible.
Also, always be prudent that the beneficiary named on your financial accounts and life insurance policies — especially those provided by employers — is not someone you are divorcing or who is deceased.
You can likely develop an Estate Plan with your attorney that will meet your needs during and after a divorce including if you have minor children. After your divorce is final with your ex spouse, a second review is essential to ensure no other changes to your documents or beneficiary designations are needed.
By taking the steps mentioned above, your assets will be distributed, and all your personal matters will be handled in accordance with your wishes.
Contact Our Firm
If you need assistance with your trust and estate planning needs during or after a divorce, including things such as creating new financial and healthcare power of attorney documents, the Tampa Bay area law firm of Denmon Pearlman can help.
Our Estate Planning services at Denmon Pearlman include:
- Living wills or an advanced directive
- Revocable and irrevocable trusts
- Powers of attorney
- Healthcare directives
- Premarital agreement or marital settlement agreement
- A special needs trust
We have offices in Tampa, St. Petersburg, and New Port Richey.
Telephonic and online consultations are available.