Divorce and Estate Planning

It is important for all people to have an estate plan (which may consist only of a Will, power of attorney, and healthcare power of attorney).  An estate plan does not have to have a bunch of trusts and family partnerships or anything else – though, these are important tools if the circumstances are correct.  When you are married, and particularly if you have children, it becomes extremely important to have an estate plan to ensure the proper transfer of your assets upon your death.  A lot of people do not have any type of estate plan and their assets are passed along to their family according to South Carolina law which may be totally opposite of your intentions.  But what happens to your estate plan when you divorce?

Divorce and Your Will

As soon as your divorce is final, you any provision leaving anything to your former spouse becomes void.  Therefore, your former spouse will no longer inherit from you.  Most of the time, that is what people, want, but occasionally, I have run into folks who still want their former spouse to inherit from them.  In that case, a new will must be prepared.  If you do not have a will, then when you are divorced, you do not have to worry about your former spouse inheriting from you.

In any case, after a divorce, I would recommend that you get with an estate planning attorney to have your estate plan reviewed to make sure it still does what you want it to do.

Divorce and Powers of Attorney/Healthcare Powers of Attorney

The law helps you out when you go through a divorce by automatically making provision  in your will that your former spouse will not inherit from you (if that’s what you want).  However, this is not so in the case of a power of attorney.  Your power of attorney is filed of public record to put the world on notice that you have someone else who can act on your behalf legally.  This notice is good until you officially revoke this power of attorney.  So, upon your divorce you should file a revocation of your power of attorney on the public record to make sure that your former spouse cannot legally bind you any longer (if that is your desire).  I would also recommend that you put other businesses that would have dealt with your former-spouse on your behalf in the past on notice that she no longer has that power.  These businesses would include doctors offices, banks, etc.

Your healthcare power of attorney is a little different.  This is not put on public record so when you create a new document, you automatically void your prior document.  However, you should make sure your healthcare providers have up-to-date copies with your current agents listed so they do not inadvertantly seek information or guidance from your former spouse.

Divorce and Life Insurance/Retirement Accounts

This is the biggie!  Once you and your former spouse go through your divorce and all of your assets have been divided (by agreement or by the court) you may be left with your retirement accounts and some life insurance.  These documents are considered “non-probate” assets, meaning they pass outside of the probate process and outside of your will because they have beneficiary clauses in them.  If you forget to change your beneficiary on these types of accounts, then your former spouse could take your life insurance or retirement account because you forgot to change the beneficiary form.  This may be disastrous if you are remarried when you die and leave nothing to your current spouse planning on the life insurance to take care of them.  It happens more than you think so be sure you make this change.

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