Clients regularly ask me how often their estate planning documents should be updated. The best rule of thumb is any time a major life event occurs. Some of these major life events can be positive and fun, like moving to a new state or starting a business. Of course, other changes, like divorce or a death of a loved one, are generally not positive and fun. Although divorces happen every day, when YOUR marriage is the one ending, it is not a common, ordinary event. Divorce can be a heated, contentious and emotionally draining time. With all the changes and upsets the divorce brings, it would be easy to overlook your estate planning. However, failing to check your estate planning documents and update them (if needed) to reflect your accurate, post-divorce wishes could be a serious mistake.
When we use the term “estate planning” we mean arranging for the management and distribution of your assets after you pass away, along with appointing people to manage your assets and make health care decisions for you if you become incapacitated. This process ensures that your wishes are carried out and your loved ones are provided for according to your intentions. In Louisiana, divorce automatically revokes gifts to a spouse in your will; however, until the divorce is final, an estranged spouse could still inherit. Also, divorce does NOT revoke gifts made in your will to your former spouse’s children or other relatives.
Also keep in mind that divorce does not automatically revoke beneficiary designations on certain financial accounts, such as retirement plans, life insurance policies and annuities. Gifts made to a spouse in a trust most likely will also not be revoked, nor will your ex-spouse be prevented from acting as the trustee of a trust you created.
If you named your now-estranged spouse to serve as your agent under a power of attorney, getting a divorce will NOT revoke that person’s right to act as your agent. By using this power of attorney, your estranged spouse could have an enormous amount of power over your assets or medical care. If you are considering divorce, it would be smart to verify the people who are appointed to act as your agents in your financial or health care powers of attorney, and take steps to change documents as needed to protect yourself and your assets from your soon-to-be-estranged spouse.
If your ex-spouse is named as a beneficiary of any of your accounts when you die, your ex-spouse will get these assets. Only you can prevent this from happening and you should start that process as soon as you are certain that a divorce is imminent.
During divorce, each spouse typically compiles a list of assets to complete a community property partition. Using this list of assets will be a good way to ensure you consider all assets you own post-divorce to update your estate planning. For assets that pass by beneficiary designation (such as annuities, life insurance, and retirement funds), you should contact the companies holding the asset to change the named beneficiaries to receive these assets at your death. There may be some beneficiary accounts that cannot be changed until the divorce is final. For those accounts, you should update them once you receive the final divorce judgment.
In addition to changing beneficiary designations, you should meet with an attorney to review your wills, trusts, powers of attorneys and health care directives as complete revisions of these documents are often necessary. If you and your spouse used one attorney who jointly represented the two of you in creating your estate planning documents, that attorney may not be able to represent either of you without receiving authority from each spouse to waive any conflicts of interest. Therefore, it may be necessary for each spouse to find a new attorney for planning purposes.
If you are getting divorced and you don’t have any planning in place, that is also a good time to establish those documents to ensure you have taken control of your assets and decisions in the way you want.
Estate planning after divorce can be complex, requiring expertise in legal, financial, and tax matters. Attorneys who specialize in this area of the law can provide valuable guidance and assistance in navigating the legal and practical considerations involved in updating estate plans after divorce, tailoring estate planning to your unique circumstances and objectives, considering all the factors in your life, such as family dynamics, asset ownership, and tax considerations.
The information provided is not intended to be legal or tax advice and does not constitute any attorney/client relationship. You should consult with an attorney for individual advice regarding your own situation.
Ms. Melancon is an attorney with Legacy Estate & Elder Law of Louisiana, LLC with offices in Baton Rouge, New Orleans and Lake Charles, LA. The primary focus of her practice is estate planning, probate, special needs planning, and elder law. For more information or to attend an upcoming estate planning seminar, call her office at (225) 744-0027.
