Estate Planning Post Divorce: Protecting Your Assets
Posted by Martin Heller Potempa & Sheppard, PLLC on January 2, 2020
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Divorce can be complicated. With so much up in the air such as living arrangements, paying support and custody battles, you have a lot to deal with. But one thing you may not have considered is the estate planning procedures you had undergone at the start of your marriage.
When you are putting trust in a law firm to help you with the divorce process, you should also be restructuring your estate planning documents to ensure your assets remain with the people you want them to go to–and not your ex.
Wills and Trusts – Estate Planning
A top priority as you continue the divorce process is to review and edit your will and any withstanding trusts.
In Tennessee, if a divorce occurs and the former spouse does not change his or her will prior to death, the will revokes any benefits that were going to go to the former spouse under the will.
But that doesn’t mean you should let the will go as is.
In addition to those named in your will being beneficiaries of your estate, the executor is responsible for paying any estate taxes or fees and handle any debts you may have left behind.
Unless your trust is revocable, you should change your trust to eliminate your former spouse. However, in some divorce proceedings, marital assets come into play when it comes to what belongs to whom and where funds have been pulled from. Be prepared to show documentation.
Power of Attorney and Advanced Directives
When you were married, it seemed obvious to name your spouse as your power of attorney if you could not make your own medical choices. However, now that the marriage is over, you most likely do not want your ex to have control of your advanced directives.
Legally, if your former spouse was your agent, a divorce automatically revokes his or her power, unless you specify otherwise in your advance directive. But you’ll want to check with a trusted lawyer to ensure you come up with a new agent under your advanced directives.
Accounts and Life Insurance Beneficiaries
While the assets left to a former spouse in a will may be revoked upon divorce, life insurance policies are not always.
In the case of Holt v. Holt, the ex-husband changed his life insurance policy to go to his mother and son following his divorce. Upon his passing, the ex-wife and son brought a suit to the mother saying the son should have the insurance policy benefits after the divorce, not the mother. The mother then passed away, and the suit went to her estate.
The Supreme Court of Tennessee held that the son should receive, through a trust, the full proceeds of his father’s policy.
Are you in the process of divorce and need an attorney who can guide you through your estate planning to ensure your assets and end of life care are in the hands of someone you trust?