How to Revise Your Estate Plan After a Divorce

If your will, living trust, or other estate planning documents still name your ex-spouse, you’ll likely want to start anew.

It's perfectly understandable if the last thing you want to do after wrapping up your divorce is sift through more documents. But if you don't take the time now to untangle your ex-spouse from your estate plan—whether you have an existing will, living trust, powers of attorney, advance directive, or a combination of these—your ex-spouse might inherit property you didn't intend to give, or retain powers you no longer want your ex-spouse to have. So take a breath, gather your old documents, and evaluate which ones you'll need to update. Consider it another way of making a fresh start; when you're done, your estate plan will reflect your new life and aims.

One word of caution—as you go about revising your estate plan, you must comply with your divorce decree (including any agreements you both made in a marital settlement agreement). So, for example, if your divorce decree or settlement agreement states that you must keep your ex-spouse as the beneficiary (recipient) on your life insurance policy, you can't change that designation. And if you promised in the settlement agreement to name your ex as a beneficiary of your insurance policy, and your ex isn't already named, you'll need to do so. Similarly, if your divorce decree or settlement agreement named a guardian for your young children in the event both parents die, or if it contains other custody arrangements, it will constrain your guardianship choices in your will.

Wills: Revoke Your Old Will and Create a New One

In many states, if your will leaves property to your former spouse, a divorce will automatically cancel those gifts. In other words, the law treats former spouses as though they died first. The property will go to the alternate beneficiary named in your will, or if you didn't name one, to the residuary beneficiary (the catch-all person you named to receive any property not specifically left to someone). In these states, the divorce did not nullify your will; it simply canceled the gift to your former spouse, and your will is still valid.

If you live in a state that cancels gifts made to ex-spouses, does this mean that you can sit back and relax, because your will can handle the situation by looking to the alternate or residual beneficiary? Not quite. For one, are you sure that you want the alternate or residual beneficiary to receive the gift? Second, if you remarry, your surviving spouse might be in for an unpleasant surprise, at the very least.

Not all states follow the practice of canceling gifts to an ex-spouse after divorce. In those states, the former spouse will indeed receive the inheritance, which is probably not what most people would intend.

Rather than taking chances or relying on state laws, it's much safer to revoke your old will and create a new will. This will also give you an opportunity to name not just a new beneficiary for your property, but a new alternate beneficiary as well, for a more robust estate plan.

Guardianship for Minor Children

If you have minor children, use your new will to name a personal guardian (to take care of your children) and property manager (to manage property your children inherit while they are minors). These two roles are often, but not always, assigned to the same person. As noted above, however, remember that any custody or guardianship decisions spelled out in your divorce decree or settlement agreement will control your decisions. For example, if the decree specified who would take over if you were to die, you must follow that decision.

If you're not constrained by a prior decision or agreement and you share custody of a young child with your ex, it's ideal to name each other as the guardian in each of your wills, and also to nominate the same person to be the successor guardian (who will take over in the event both of you die). If you have sole custody and want to name a guardian other than your ex, unfortunately that designation might not hold up in court. If your ex is the biological parent and contests the guardian designation in your will, the court will usually defer to your ex unless your ex is clearly unfit. If this is your situation, discuss your options with an attorney, who can help you document your ex-spouse's unsuitability as a parent.

Living Trusts: Revoke Your Existing Living Trust and Make a New One

Revocable living trusts, like wills, are legal documents that spell out whom you want to receive your property at your death. (Unlike wills, revocable living trusts avoid probate, a lengthy and sometimes costly court process.) If you and your ex made a joint living trust, some or all of the assets held in that trust—like real estate, bank accounts, investment accounts, and other property—will likely have been divided and allocated as part of the divorce settlement. It's very possible your trust has already been revoked or dissolved. If not, it's best to do so now and create a new, wholly separate living trust of your own—one that fits your newly single life. If you're not concerned about having your estate go through probate, you can just write a new will.

Powers of Attorney and Advance Directives: Create New Forms

Spouses often use powers of attorney (POAs) to name each other as agents (sometimes called "attorneys in fact") who are authorized to act on each other's behalf. POAs are important estate planning documents because they allow you to plan for your possible incapacitation; you can name someone you trust to make decisions for you in the event that you no longer can. But if that person is your ex-spouse, it might be time to reevaluate.

In most states, if you gave your spouse the power to act as your agent and then divorce, that authorization automatically ends. But again, the wisest course of action is to be crystal clear about your intentions post-divorce by revoking a POA and creating a new one. This is true even if you still want your ex-spouse to be your agent; avoid potential confusion and make a new POA.

To do this for a financial POA (a POA that grants authority to someone to handle your financial matters), take the following steps:

  1. Write and sign a notice of revocation, a simple document that states your wish to revoke the old POA.
  2. Give a copy of the notice of revocation to the former agent, as well as any third parties, such as financial institutions, that might have the old POA on file.
  3. If the old POA office was recorded (filed) in any county land records offices, you'll need to record the revocation as well.
  4. Make a new POA that explicitly revokes your old one. Depending on your state, you'll need to sign the new POA in the presence of witnesses or a notary public, and sometimes both.
  5. Give the original of the new POA to your new agent, and keep a copy for yourself.
  6. If your new POA grants the power to conduct real estate transactions, you should also record the new POA in the land records office of the county where you own real estate.

For a medical POA, a POA that grants authority to someone to handle your health care matters (also called a "health proxy"), the nitty-gritty of how to revoke it and create a new one will depend on your state. To complicate matters, some states combine a medical POA with a "living will"—a document stating your wishes regarding medical treatment and end-of-life care (not to be confused with a regular will, which leaves property to your inheritors). This combined document is often called an "advance directive" or "advance health care directive." Look up your state's specific health proxy or advance directive form for more information on how to revoke it. Usually one of these steps will be sufficient:

  • Sign a document that revokes the advance directive
  • Physically destroy the advance directive
  • Create a new advance directive

Regardless of how you revoke the old advance directive, you should create a new one, notify old agents and health care providers in writing, and provide copies of the new directive to new agents and health care providers.

Beneficiary Designations: Review Your Accounts

Don't forget to review the beneficiary designations on any assets you own that will pass directly to inheritors, separately from the gifts in your will or living trust. These might include:

  • Life insurance policies
  • Bank accounts or certificates of deposit (CDs)
  • Investment accounts
  • Retirement plans like 401(k)s, IRAs, and pensions
  • Real estate for which you've created a transfer-on-death deed
  • Vehicles for which you've named a transfer-on-death beneficiary

If you'd like to change a beneficiary from your former spouse to someone else, the process is often as simple as filling out a new beneficiary form. However, as mentioned earlier, pay attention to how your married assets were divided at divorce; the horse-trading involved in asset allocation often results in one spouse agreeing to keep another as a named beneficiary on a retirement account or other asset. You cannot make decisions now that are contrary to those agreements.

Be especially cautious with 401(k)s, pensions, employer-maintained life insurance policies, and any other plans that are governed by the Employee Retirement Income Security Act (ERISA), a federal law. In this federal realm, state laws that automatically void gifts to ex-spouses do not apply. For (an extreme) example, even if your ex-spouse waived rights to your 401(k) as part of the divorce decree, your ex-spouse might get the money anyway if you never changed your 401(k) beneficiary. (Kennedy v. Plan Administrator for Dupont Savings & Investment Plan, 555 U.S. 285 (2009)).

Getting Started With Estate Planning After Your Divorce

Tackling each of the documents mentioned above might seem like an insurmountable amount of work, but rest assured, it's very doable. If you hire an experienced estate planning attorney, the attorney will be familiar with issues specific to divorced people and can easily and quickly help you revoke old documents and make new ones. If you go the do-it-yourself route, software like Nolo's WillMaker & Trust can guide you through the process of making new wills, living trusts, POAs, and advance directives that are valid in your particular state. Either way, you'll have help.

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