When married, it often feels natural to name a spouse as the primary beneficiary, attorney-in-fact in a durable power of attorney (“DPOA”), agent under a health care proxy (“HCP”) and fiduciary of the estate as well as the guardian of shared children. Although divorce automatically revokes any revocable disposition or appointments made in favor of a former spouse or a relative of a former spouse in an estate plan[i], a divorce, especially a contentious one, complicates these arrangements.
Relying solely on the default provisions of the law is not always enough. Proactive steps are essential, specifically during the divorce process, which can often be measured in months and years to resolve. If one spouse were to pass away or become incapacitated during that time, the other spouse could still be a beneficiary of the other spouse’s estate or hold fiduciary roles under an HCP/DPOA, which may be contrary to the deceased or incapacitated spouse’s interest.
The Importance of Updating One’s Estate Plan
Once a divorce is finalized, estate plan documents can be executed for each spouse as if the former spouse never existed, except for obligations and rights under any existing agreements, such as a separation agreement. Although an automatic restraining order applies to spouses while the divorce is pending,[ii] it is beneficial to work with an estate planning attorney and financial advisor during the process to (1) draft new estate plan documents that reflect current intentions and (2) reassign key roles such as executor, trustee, guardian and health care proxy to trusted individuals other than a soon-to-be ex-spouse.
Some individuals remain on good terms with their ex-spouse and want to keep the spouse in their estate plan as fiduciary or beneficiary. In this case it is still important to create new documents to ensure that the ex-spouse is included despite the revocation by statute.
If an ex-spouse plans to remarry and either partner has children, careful planning becomes even more important, as blended families require deliberate strategies to balance interests and provide for all parties.
Revisiting Beneficiary Designations
Although a divorce will automatically revoke an ex-spouse from a will, non-probate assets (e.g., insurance policies, retirement accounts and bank accounts) may not be automatically updated by law, depending on the type of account. The owner of such accounts should review and update all beneficiary designations. Typically, specific accounts are addressed in the separation agreement between the parties.
Revocable Trusts and Wills can be amended. These instruments often make references to spouses and can be drafted to reference divorce settlements between parties memorializing rights against or obligations to the other spouse which the estate fiduciary must handle at death.
Couples who have irrevocable trusts often require more detailed consideration as former spouses may be designated as a beneficiary or trustee of the irrevocable trust and there may be ongoing income tax considerations with respect to the irrevocable trust.
Health Care Proxy and Durable Power of Attorney
Two of the most important estate plan documents are the health care proxy and durable power of attorney. These documents provide a named individual the legal authority to make medical and financial decisions, respectively, upon the principal’s incapacity.
If the divorce is pending, a current spouse may still have these powers. To avoid this, the spouses should each have the documents revoked immediately and appoint new, trusted individuals to act. Once the divorce is finalized, an ex-spouse is legally removed from these roles, but new representatives should still be designated for clarity.
Guardianship Considerations
Typically, if one parent dies the Massachusetts courts often favor the surviving parent in guardianship matters. However, in scenarios where both parents die or the surviving parent is deemed unfit, an alternate guardian may be appointed. Memorializing wishes for an alternate guardian in a Will can reduce disagreements among family members, allow the parent’s intentions to be known by the court and increase the likelihood that a child’s care is handled according to the parent’s values.
Planning for the Future: Consider a Prenuptial Agreement
If remarriage is a consideration, a prenuptial agreement can be a prudent decision, particularly when either spouse has children from a prior relationship or there is a significant disparity in income or assets. A well-crafted prenuptial agreement can protect assets each party wants to pass to children from a prior relationship, prevent future legal battles and clearly define ownership and inheritance rights. It is important that prenuptial agreements be created well before the marriage becomes legal, and that each party enters into the agreement after full disclosure of assets and with the advice of legal counsel. Learn more about the nine benefits of a prenuptial agreement here.
Consult with an Estate Planning Attorney
The end of a marriage can be emotionally and financially taxing, but it is also a critical time to reevaluate one’s future. Consulting with an experienced estate planning attorney ensures that wishes are clearly documented, unintended legal consequences are avoided and that the estate plan aligns with post-divorce goals. From Wills and Trusts to beneficiary designations and health care proxies; each element of the estate plan must reflect one’s current life circumstances.
At Wilchins Cosentino & Novins, we are thoughtfully organized to assist our clients with their legal matters from our Family Law practice for divorce and guardianship matters to our Private Client Services practice for trust and estate planning. Whatever the legal needs, you can be assured our firm’s attorneys work closely and cohesively to best serve our clients, including during challenging times such as divorce and the associated impact on one’s estate plan.
This article is not legal advice and should not be taken as such or relied upon as legal advice.
[i] MGL c. 190B, sec. 2-804
[ii] Supplemental Probate and Family Court Rule 411