Whether you are recently divorced or still in the midst of the process, don’t forget that your estate plan should change with this important life event. No one will blame you for wanting to avoid involvement with more lawyers right now, but consider what it would mean if you were to die or become incapacitated before the judge issues your divorce decree?
There’s a lot at stake when people fail to update their estate plans under normal circumstances, but a divorce can up those stakes even further. Someone you no longer trust may be in charge of your end-of-life medical care and can inherit separate property that you were trying to protect during the divorce.
If either of these scenarios sounds a bit troublesome, keep reading to learn more about how you should update your estate plan during divorce.
Filing for divorce revokes both spouses’ authorities to act as each other’s agents. This means that if you or your spouse is committed to getting a divorce but failing to actually file, they can wreak havoc on your financial affairs should they exercise the power of attorney.
If your marriage has soured a bit and divorce seems like it may be on the horizon, changing your power of attorney and selecting a new agent may be the first step to take in changing your estate plan. Even if your marriage rebounds, you may feel more secure having the new agent in charge of your affairs should you need them to do so.
If your divorce is still pending, you’ll want to update your will as soon as possible if you want to be sure that your soon-to-be ex-spouse is disinherited. If you happen to pass away before changing your will and before your divorce is finalized, your spouse can still inherit your estate normally.
Fortunately, things change a bit when you are legally separated or completely divorced. Even if you failed to update your will after either of these events occurred, any provisions that benefit your ex-spouse will likely be ineffective.
Here’s what California law says on the matter:
“Unless the will expressly provides otherwise, if after executing a will the testator’s marriage is dissolved or annulled, the dissolution or annulment revokes … any disposition or appointment of property made by the will to the former spouse.” – Probate Code § 6122
Keep in mind that this only applies to your ex-spouse. If you wish to disinherit your ex’s children or other relatives, you will need to update your will to reflect this. While the law would prevent your ex from inheriting your property anyway, there’s no reason not to write them out at this point anyway.
Matters concerning your revocable living trust are treated very similarly to your will: If you pass away before the divorce is finalized and your trust is changed, your spouse stands to inherit your assets. If you pass away after the divorce decree is issued but fail to update your trust documents, then the provisions of your trust can ensure your spouse will inherit nothing.
The key here is the revocable nature of a living trust. Once its terms are established, they can be revoked at the behest of the trust maker or when a certain event – such as their death – occurs.
The same isn’t always true for irrevocable trusts, like those that hold life insurance policies. Because these terms can’t be changed by the trust maker once established, any named beneficiary – including an ex-spouse – may still have a right to that property.
If your spouse or ex-spouse is still named as your agent for your medical directive, you may want to change this as soon as possible. Unlike all of the previously mentioned documents, neither filing for divorce nor receiving a final divorce decree will revoke your spouse or ex-spouse as your medical agent.
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