Divorce is a life-changing event, and because it impacts more than your present-day life, it requires that you make changes to your future plans. While that may entail a fresh emotional assessment and a new perspective on what lies ahead, it also includes the more practical side of life and financial planning, including estate plans, contracts, and accounts that may need to be revised after divorce.
At Robert Sparks Attorneys, we know that divorce creates serious issues that can radiate far beyond the nuts and bolts of spousal support, child custody, and property division. That’s why we provide the comprehensive counsel, resources, and connections to support services clients need to prepare for their new futures.
4 Areas of Focus for Post-Divorce Estate Plans
While there are many things to anticipate and prepare for after divorce, the “fresh start” it provides also offers opportunities for valuable re-assessment of critical estate planning tools.
Below, our team highlights 4 areas of focus for estate planning after divorce:
1. Get Serious About A New or Revised Will
Although some people who end marriages amicably may leave their ex-spouses in a will, the vast majority will not want a former spouse to get their money or have the power of making important life decisions. For divorcing parties in Florida, there is statutory law that voids provisions of a will in the name of a former spouse should a spouse forget to remove them on their own, unless expressly provided otherwise by the will, judgment, or dissolution agreement (Florida Statutes § 732.507(2)).
- Florida Statute § 732.703 affects a former spouse's right to claim assets in the estate, insurance proceeds, or obtain distributions as a beneficiary. In simpler terms, the statute dis-inherits ex-spouses from each other’s probate estate and, thanks to changes enacted in 2012, from non-probate assets which pass outside of the estate (i.e. retirement, life insurance, etc.). However, some retirement accounts may be subject to federal laws that negate the effect of this law.
Because every case is different and because some exceptions exist, it is always important after a divorce to update your will, estate planning documents, and asset contracts. Updating a will or creating a new one can help you address:
- Assets: Although there are laws meant to prevent the unintended transfer of assets to an ex-spouse after divorce when the other did not update their will (although only after a divorce is finalized), it’s wise to pro-actively revise a will to name a new person(s) as the beneficiary.
- Executors: If a will names an ex-spouse as an executor or administrator of a will, you can change this in a new will.
- Child Guardian: In the event something should happen to you and your children’s other parent, a will may stipulate who will act as the children’s guardian. Judges have discretion to make final decisions regarding guardians, but re-evaluating after divorce can allow you to name a new person, especially if the current named guardian is a former in-law.
2. Power of Attorney / Health Care Surrogate
If you prepared a will during the course of your marriage, it likely designates your ex-spouse as the party who would have decision-making power over finances and health care in the event of incapacitation or an unforeseen event. Even if you don’t have a will, divorce provides a great opportunity to get these types of documents in order:
- Durable Power of Attorney: You can appoint someone other than your former spouse to assume control of your legal and financial affairs should you become unable to manage them.
- Health Care Power of Attorney: You can name a new person to make medical decisions on your behalf if you become unable to make them yourself.
- Advance Directive / Living Will: An advance directive or living will can be used to express your wishes if you become unable to express them yourself, such as after an accident.
Generally, Florida Law stipulates that once a divorce is finalized, a divorced spouse will no longer have the power to act as a Health Care Surrogate for the other (765.104(2)). When a principal divorces the agent named in a Power of Attorney, however, the power of attorney will terminate when the divorce is filed (709.2109(2)(b)). If you don’t have a named successor, the document will no longer be effective the moment a divorce or an annulment is filed.
3. Trusts / Living Trusts
If you created a trust during your marriage – be it a revocable living trust for yourself or a trust for your children – revisit these documents upon divorce. As many spouses establish joint trusts, name one another as trustees who oversee assets in the trust should one spouse pass away, or name a spouse as a beneficiary, you may want to create new documents.
4. Retirement, Life Insurance, Investments
Wills do not always determine the fate of assets or parts of your “estate” that can be passed to others upon your passing. Certain financial assets may go directly to a designated beneficiary, even if it’s a former spouse. These can include:
- Retirement accounts (i.e. 401(k), IRA, pensions)
- Life insurance policies, qualified annuity, or similar tax-deferred contract
- Bank accounts or investment accounts which “transfer on death” or have a “payable on death” clause
Under Florida law, payors / insurers can refer to a decedent’s marital status (“Single,” “Divorced,” or “Married” to someone else) to pay a secondary beneficiary, if one is named. State law voiding the transfer of assets to an ex-spouse after divorce, it does not provide the same protections for non-probate or non-trust assets – such as a life insurance policy.
Because retirement and financial planning is a major concern in divorce, especially “gray divorces” involving older spouses who part ways and have, or will soon have, limited income, it’s important to revisit any and all non-probate assets, accounts, and policies in addition to addressing how retirement, pensions, and other similar assets are divided in divorce.
After a divorce, you can speak with institutions, banks, and companies with whom you hold such accounts, and change who is listed as a primary and secondary beneficiary.
It’s Time to Get Serious About Comprehensive Support in Your Divorce
There are many moving parts in a marriage, and many things to unwind and revisit when a marriage is ended. At Robert Sparks Attorneys, our award-winning trial attorneys offer the experienced, personalized guidance clients need to navigate the divorce process, as well as the comprehensive counsel they need to make informed decisions about their futures.
If you have questions about a potential divorce case or estate planning issues after divorce anywhere in Tampa or the surrounding areas of South Florida, get serious about your future and contact us today.