Nasty Pile Up at the Intersection of Divorce and Estate Planning
Everything was great while you were married. You and your spouse planned for a long life together. You even made plans (hopefully) for distribution of your assets after you die through a will or a trust agreement. You named each other as beneficiaries on insurance plans and retirement instruments. Then the bottom drops out. You’ve decided to get a divorce. While, during the divorce process, you have a thousand things on your mind, don’t let estate planning matters get lost in the shuffle.
In most cases, your spouse is listed as the executor of your estate, successor trustee, agent designated in powers of attorney and primary beneficiary. Is that what you still want? One of the most important considerations after a divorce is how your estate plan will be affected. Understanding the impact of divorce on your estate plan and the kind of updates you will need can help you avoid a nasty pile up at the end.
While it is an unpleasant thought, what happens if you die before your divorce is final? If you’ve done no estate planning (i.e. a will, trust etc.), in Illinois, your spouse will receive one half of your probate estate if you have children, and all of your estate if you have no children.
Under Illinois law, upon divorce, any portions of your will that provide for your now ex-spouse will automatically be revoked. The ex-spouse is considered to have predeceased you for purposes of your will and revocable trust. But beware, automatic revocation occurs only after a divorce is final, so if you happen to die while the divorce proceedings are winding their way through the Courts, the will would stand as written.
Married individuals typically designate their spouse as the executor of their assets in their will and the successor trustee in their revocable trusts. These designations must also change.
Beneficiary designations are another area that must be changed immediately. Beneficiary designations, unlike wills or trusts, do NOT consider your ex-spouse to have predeceased you. Proceeds of life insurance and retirement instruments will be distributed according to the beneficiary designations you have made. Forgetting to change these designations after a divorce can result in an unintended distribution of your property to your ex-spouse after the divorce. There is no statute or law in Illinois prohibiting your ex-spouse from receiving your retirement assets or life insurance proceeds if you do not change the beneficiary designations after the divorce is final.
If you have durable powers of attorney for healthcare or property with your spouse as your designated agent or successor agent, change these right away. Otherwise your ex-spouse could have unfettered access to your bank accounts and make health care decisions on your behalf if you are incapacitated.
If you have minor children, an alternate guardian should be named under your will. While the law automatically deems a surviving parent the guardian, the Court must consider what is in the best interests of the children. If your ex-spouse dies after you but while your children are still minors, he or she may not have designated guardians. A Court will then look to your will for guidance.
With over 30 years’ experience in advising families and confidential information for businesses on estate planning issues, let Boznos Law work with you to ensure you are ready to meet the challenges posed by the ever changing estate planning landscape. Call Bill Boznos today at (630) 375-1958 or contact us at www.boznoslawoffice.com/contact-us through our website at www.boznoslawoffice.com