Most people think of their divorce as complete when the court issues the decree but there’s usually still work to be done in the transition from “we to me.” If you haven’t done these six things, you will leave a mess when you die. It’ll be a mess that you never intended and one that friends and family won’t thank you for and you wouldn’t want that, would you?
The six things you must update are:
- your Will
- your healthcare power of attorney
- your healthcare directive
- your financial power of attorney
- your HIPAA release
- your beneficiaries on financial accounts
While I say “update,” the truth is that many people don’t have the first five of these in place even though everyone needs them – the amount of assets you have has nothing to do with this. Divorce does makes this a little more complicated, particularly if you have minor children and this is the topic for this episode of my Conversations About Divorce podcast with estate planning attorney, Martha Hartney.
Here are some of the complications that Martha and I chatted about.
Once you’ve filed for divorce, there are typically some automatic, temporary restraining orders that come into play. Among other things these mean you can’t disinherit your spouse. So you can’t remove your spouse as beneficiary on any financial accounts or your Will until your divorce is final. However, your healthcare POA, healthcare directive, financial POA or HIPAA release do not involve the disposal of assets so these can be updated while your divorce is in progress. Chances are your spouse is named in these documents and if you feel that your spouse is no longer the best person to act on your behalf, then these changes need to be made sooner rather than later.
There are resources available online such as LawDepot, offering free or low-cost options for these documents. If you have more than $100,000 in assets then you’ll definitely want to consult with an attorney and if you’re in a protracted divorce, then visit with an estate planner who is familiar with divorce and do be open with them about your divorce because you want to avoid any changes being challenged later.
Your Divorce Decree Is Not Enough
Martha Hartney says that as soon as your divorce decree is signed, your spouse is “struck” from your estate. It’s as if they predeceased you and that means they are generally blocked from inheriting from you. There can be complications however. If you named your spouse as a beneficiary on say a life insurance policy and designated them by name as opposed to “spouse,” an argument could be made that they are still your beneficiary. So you will want to review the beneficiary designation on each and every account to double-check. And it isn’t as simple as naming your minor child as your beneficiary. Doing that could give your former spouse a foothold into your estate because as your child’s other parent, they are your child’s legal guardian. More on this below …
Do Not Name A Minor Child As A Beneficiary
Financial institutions generally won’t make payments to a minor child. So if say you have a life insurance policy that becomes payable while your child is still a minor, then the company will likely require your ex (your child’s legal guardian) to become a conservator for the child to receive payment. Once payment is made though, there is no supervision on how monies are spent.
The solution is to have the proceeds go through a trust for the benefit of your child. You designate the trustees and so can appoint people you are confident will use the monies to benefit your child as you would have done. You’ll like need legal help to set this up.
Do You Want To Restrict The Other Parent?
On your death, your child’s surviving parent may automatically become the sole custodial parent. If this is not what you want to happen, then do seek legal advice. If your ex is in jail, is a violent offender, or absent, for example, then you have legitimate concerns and good grounds for wanting to restrict parenting time.
Designate A Guardian
Martha Hartney says the sad reality is that most married people do not designate a guardian for their child in the event that both parents pass away and the main reason for this is that couples can’t agree on who to appoint. With divorce, you don’t have to agree and you each have the right to designate a successor although that person will only become guardian in the event of the death of both you and your ex. If you and your ex do appoint different people that can also lead to conflicts that a court may have to resolve. It’s complicated.
In an ideal world, you would hope that if you were to pass away that your ex would still permit your child to spend time with your parents, their grandparents but it doesn’t always happen.
Restricting the access of grandparents to a child is now such a common occurrence that most states now have laws about this. Currently, grandparents are the only parties that have the right to request visitation through the court. Aunts, uncles, cousins, for example don’t have similar rights. The court then has to decide if it is in the child’s best interest to have a relationship with the grandparents. You can help ensure this happens or doesn’t, by documenting your wishes.
Similarly, if there are other people you wish your child to have a relationship with or with whom you want access to be restricted, then you need to put your wishes in writing so the court can hear it from you. An attorney can help you do this and advise on where such a document should be stored.
Do Not Procrastinate
Planning for your death, especially if you have minor children is such a critical issue that Hartney wishes divorce attorneys had a better understanding of the complications that can arise when it’s not done timely or properly. Understandably, most of us simply don’t have the emotional bandwidth to deal with this at the same time as thrashing out our financial agreement and parenting plan but really, the mindset needs to change: your divorce is not final until this is done.
Aside from the bandwidth issue, I think the main reason for procrastinating about this is simply that with the spouse out of the picture, people often don’t know who to ask to take on these roles. Embarking on this discussion with a friend no matter how good that friendship, seems like taking the relationship to a new level of personal. Asking another family member involves disclosing more about your personal affairs than you may have previously done. There are professionals who offer this service but Hartney says the best people to serve are friends and extended family because they are the ones who know you. As awkward as this may feel, you need to ask the person if they are willing to act for you. Don’t just appoint them and let them find out after you’re gone.
Martha Hartney is a Boulder-based estate planning attorney with Hartney Law. She has a free download for you: 10 Tips For When You’re Going Through One of The Worst Times of Life. You can follow Martha on Facebook and Twitter as HartneyLaw.