Divorce and Your Estate Plan

As we look at the ever changing family paradigm, we see a trend over the years of increasing divorce rates with the various generations.  The so called “gray divorce” is on the rise. Statistics show the divorce rate for adults age 50 and older (Baby Boomers 1946-1964) has roughly doubled since the 1990s.  The Gen – Xers (1965-1981) have a divorce rate that has climbed slightly, however, not to the extent of the Baby Boomers. Interestingly, the Millennial Generation (1982-2002) has had a falling divorce rate, which is more than likely due to the fact that this generation tends not to marry until later in life, often after college education is completed.

Since this Baby Boomer Generation is the largest category of clients we see for estate planning purposes, it is important to think about how a divorce can impact your estate plan.  If you are contemplating divorce or are in the middle of a divorce, your estate plan is probably low on your list of considerations. However, some updates are important to think about during and after the divorce.

During Divorce/Annulment

Normally, parties to a divorce are prohibited from changing any beneficiary designations during the divorce process.  The parties however, may still legally change their power of attorney and health care directive forms. As a refresher, a power of attorney form gives a trusted individual access to your financial accounts to manage on your behalf if you cannot.  A health care directive is the form that is used to give others the ability to speak on your behalf and make health care decisions for you if you are unable to do so yourself. You can imagine having a spouse you are currently going through a divorce with listed on these documents could be very uncomfortable for the parties.

After Divorce/Annulment

After your divorce is completed, you should be updating your estate planning documents.  This includes your Will, Trust, power of attorney and health care directive. You should also be reviewing and updating your beneficiary designations on your financial accounts.  Minnesota law does provide some protections for an individual who is divorced and fails to revise his/her estate documents. These default provisions generally provide that the disposition of property to the deceased person’s former spouse will be treated as revoked for purposes of that deceased person’s Will, Trust, insurance or annuity policy, accounts with a payable on death designation, securities with a transfer on death designation, transfer on death deed, pension, profit sharing, retirement or similar benefit plans.  You should however, not rely on the default, make your intentions clear and eliminate any confusion.

If you just obtain a decree of separation, this default protection does not apply.  You should also be aware that this automatic revocation does not apply to your former spouse’s family members.  For example, if you list your former spouse’s sister to act as your personal representative in your Will, your sister in law would not automatically be removed from acting as your representative just because you divorced your prior spouse.  If you provided for cash gifts in your Will to nieces and nephews of both you and your former spouse – that gift would still stand.

Despite your divorce, if you intend to list your former spouse in any way in your estate plan, you should execute new documents to make clear that you still intend that former spouse to be included in your estate plan documents.

As you can see there a lot of considerations related to your estate plan in the context of a divorce.  Please be sure you have an attorney review your estate documents. It is often helpful to have your divorce attorney and your estate plan attorney coordinate so all of the details are considered.  Sometimes there are existing terms in the divorce decree that can impact your estate plan after divorce.

Please send me an email at rene@breenandperson.com with any topic suggestions or requests you may have.  Although we cannot give you legal advice through the column, we can provide some general information that may be helpful for you to know.  Our purpose is to educate and we hope that you can take something new away from this column each time you read it.