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Going through a divorce can be an overwhelming experience. There are so many legal and financial decisions that one must make during a period of emotional turmoil. During this chaotic time, many people don’t think about the important estate planning implications that a divorce or separation may have.
Here are some reasons why it is so important to reevaluate your estate plan when going through a divorce or separation:
Once the divorce decree has been issued many aspects of your estate plan may change automatically. However, nothing about your estate plan changes during the process of obtaining a divorce or while you are going through a separation.
Many people name their spouse as an agent under their Health Care Proxy and/or Durable Power of Attorney. This common planning strategy allows your spouse to make health care and financial decisions for you in the event you are unable to make these decisions yourself. However, if you are going through a divorce or separation then you probably don’t want your spouse to make financial and healthcare decisions for you. This is why it is very important to update your Health Care Proxy and Durable Power of Attorney to reflect your current wishes. Although a divorce decree revokes any rights your ex-spouse had to act as an agent under your health care proxy or power of attorney, nothing changes during the process of obtaining a divorce unless you revise and re-execute these documents.
Last Will and Testament
In addition to naming their spouses as agents under their advanced directives, many people nominated their spouse as fiduciary and leave assets to their spouse under their Last Will and Testament. Again, although a divorce decree revokes any rights your ex-spouse had to act as nominated fiduciary, and may revoke any bequests or devises that may have been made under the Last Will and Testament this is only relevant once a divorce decree has been issued. Likewise, if you name your spouse by name under your Will then the divorce decree may not revoke his/her right to the assets or appointment as fiduciary.
While some beneficiary designations may be revoked by operation of law in New York, it ultimately depends on the language governing the designation. Likewise, the designations themselves are not actually revoked unless a divorce decree has been issued. This means if you are separated and pass away during the process of going through a divorce the beneficiary designation is still effective. Even if the divorce decree has been issued and the designation is revoked, if you fail to list successor beneficiaries, the asset would become a part of your “probate” estate and would require an estate administration or probate proceeding before it is passed to your loved ones.
A divorce decree has no impact on the appointment of your ex-spouse’s family or friends as an agent under your advanced directives, a fiduciary under your Last Will and Testament, guardian of your minor children under your Last Will and Testament, or designated beneficiaries. For example, if your Will appoints your ex-spouse’s brother to be the guardian of your minor children, or if you left assets to any of your former spouse’s family or friends, either as a beneficiary designation or beneficiary under your Will, a divorce does not revoke those selections.
Being married can have significant tax advantages with regard to estate planning. If the strategy for your estate plan was premised on you being married, then getting a divorce could create significant tax consequences. It is important to review these consequences and revise your estate plan accordingly.
Going through a divorce can be a very stressful process. Let us help to make this time easier by confirming that your estate planning documents conforms to your current wishes. Contact our highly experienced team of attorneys at Vincent J. Russo and Associates, P.C. today to gain peace of mind.
By Eric J. Einhart – Guest Blogger