Category: estate plan

The Importance of Updating Your Estate Plan After a Divorce

The Importance of Updating Your Estate Plan After a Divorce

Here is a cautionary tale from New York about the dangers of not properly updating your estate plan after a divorce.  Robyn Lewis and her husband executed wills naming each other as the beneficiary of each other’s estate in 1996.  They later divorced in 2007 and five years later, Robyn died.  Since her death her surviving family have been embroiled in a legal battle with Lewis’ former in-laws who claim that they are the rightful heirs under Lewis’ will.  At stake is a home that has been in Lewis’ family for generations.  Originally, the probate court admitted the 1996 will to probate and affirmed that Lewis’ former in-laws were heirs under the terms of the will.  That decision was upheld by the Appellate Division and was appealed again to New York’s Court of Appeals who finally made a ruling three years after Lewis’ death that sends the case back to the trial court for further proceedings. There appears to be some dispute as to whether Lewis, in fact, executed a new will and it just could not be located at the time of her death, but nevertheless, this case highlights the dangers of failing to update your estate plan after a divorce.

When a divorce is over most people are just glad to be through with it and do not really want to dwell on it anymore.  Unfortunately, as with a lot of things in life, the work is not over until the paperwork is done.  That includes updating your estate plan.  If you are like most people you have probably designated your now ex-spouse as your executor, your primary beneficiary of your will, and the beneficiary of your life insurance, investments, and retirement.  Your ex may also be designated as your attorney-in-fact under your power of attorney or living will.  As a practical matter, the person you just drug through divorce court is probably not the person you want to be making decisions about whether to pull the plug on your life support.

Once the divorce is completed, you need to meet with your estate planning attorney and revoke all previous wills, codicils, powers of attorneys and living wills that designate your ex-spouse in any way.  You also should review all of your specific bequests and make sure that your property will be distributed the way you wish it to be distributed.  If you have minor children you will need to discuss how to properly provide for them because minors generally cannot inherit directly from an estate so you may need to set up a trust or make other arrangements.  You should also designate someone to act as your child’s guardian in the event of your death.  (Generally, the other parent will assume custody upon the death of one parent, but sometimes the other parent is absentee or otherwise unwilling.)

Next you need to meet with your HR person at your place of employment to change all of your beneficiaries on your pension, retirement plan, and insurance provided through your employer.  Finally, you will need to meet with your financial advisor to change all of the beneficiaries on your investments, bank accounts, and private life insurance plans.  At some point during your divorce, your attorney probably had you make a list of all of your investment plans and other accounts.  Go through that list one at a time and update them.

Thinking about what will happen when you die is never a pleasant experience, but the last thing anyone should want is to leave their loved ones with a nasty lawsuit on their hands.  Learn the lesson of Robyn Lewis well and do not repeat her mistakes.

Photo courtesy of Elliott Brown

The Divorce is Over. Now What?

The Divorce is Over. Now What?

The divorce is over and the dust has settled.  The court has said that you are no longer husband and
wife.  Now what do you do?  The time has come to notify other necessary people that you are divorced and take steps to change your official records and important papers.  Below is a list of some of the issues you need to deal with and people you need to notify.

  • Your Employer:  Make sure your employment records reflect your new single status.  This will require you to change your wage deductions, beneficiaries and possibly other withholdings.
  • Retirement Benefits:  This may fall under contacting your employer, but if you received a share of your spouse’s retirement, make sure you also received a copy of the qualified domestic relations order and contact the plan administrator to make sure they have everything they need to get you the benefits you were awarded.
  • Banks & Investments:  Notify banks, investment clubs, credit unions, etc. of your new single status and make sure your spouse’s name is removed from any accounts you received.  Destroy all old checks from any joint accounts.
  • Insurance:  Again change your beneficiaries.  If you are no longer required to carry certain family members on your policy, contact your company and have them dropped.  If you were covered under your ex-spouse’s employer’s plan, contact the employer immediately about COBRA benefits if you have not made other arrangements for health insurance.
  • Taxes:  Contact your tax professional to discuss your new tax status and what you need to do to prepare for the next tax season.
  • Credit Cards:  Destroy all joint cards and close the accounts or have them transferred to your name alone (or your ex’s if he/she was ordered to pay the debt).  Verify your ending balances.
  • Important Documents:  Review all deeds, titles, and other documents of ownership to make sure property is placed in the name of the person who received it in the divorce.
  • Will/Estate plan:  Review your estate plan and modify your beneficiaries and testamentary gifts accordingly.
  • Power of Attorney:  If your ex spouse had power of attorney over you, revoke it and have a new one prepared.
  • Name Change:  If you changed your name as part of your divorce, you need to have it changed on your driver’s license, the Social Security Administration, and your financial institutions.
  • Social Security Benefits:  If you were married for ten (10) years or more, you have the right upon retirement to claim the higher of your benefits or your ex-spouse’s level of benefits.  Keep a copy of your marriage license and divorce decree to show the Social Security Administration when you qualify to file.
  • Child Support:  If you are receiving or paying child support contact your local child support office to make sure they have your contact information and a case open on you.  This will ensure that you receive proper credit if you are paying or provide a way to prove that you have not received support you are owed.  If there is a substantial change in your or your ex-spouse’s financial condition, you may be eligible for a child support modification at any time after the divorce.

Finally, always keep a copy of your divorce papers in a secure location that you can readily access.  While this list is not an exhaustive list of post-divorce action steps, it will cover most issues that will or could arise after your divorce.  For more detailed information, contact your family law professional.

Photo courtesy of CollegeDegrees360