There are many things we think will NEVER happen to us. One of them would certainly be Divorce, because who would get married knowing it would set them up to go through one of the most difficult and emotionally draining periods of their life?
The second NEVER, which sadly does happen, is that we are all at risk of becoming incapacitated or worse, dying before the Divorce is over. And while we sometimes hear horror stories of divorcing couples where the soon to be ex-spouse “got-everything” because someone died before the divorce decree was signed, it doesn’t mean that there isn’t something you can do about it!
If you are like me, you would like to remain in control over your life as much and as long as possible. Divorce is not easy, and while your current spouse still has certain rights, and you still have certain duties, you still want to exercise as much control over your own wellbeing and your assets as much as possible.
Let’s look at the 5 things you can to do protect yourself when filing for divorce. (For the purposes of this article I am going to presume you already sat down once in your life to create an estate plan, however if you never did, this would be a great time to start!)
1. Update your Medical Power of Attorney
Without an updated Medical Power of Attorney (Medical Directive or Health Care Proxy), your soon to be ex-spouse might be the one who decides what happens to you when you are in an accident or become incapacitated before the divorce is over. It needs no further explanation why this isn’t recommendable, and why you should take control and appoint someone you trust to make the right decisions for you when you cannot.
2. Update your power of attorney
Contact your Estate Planning attorney who drafted your power of attorney (POA), you want to revoke any old POA’s and draft a new POA, giving control over your finances and assets to someone you know and trust. Most of the time when we draft a POA during a marriage, the spouse is given control over all your assets (including your separate property). It should come as no surprise that maybe your soon to be spouse might be less than a stellar choice in the circumstances of a divorce to manage your estate for you. Also, make sure you get educated about the difference in General POA and Durable POA (there is a big difference there), so you understand what you are or are not signing.
WARNING: before you or our Attorney-in-Fact change beneficiary designation of life insurance, retirement accounts or plans (like your 401k), and pensions during the divorce you MUST consult with your divorce attorney to see if this is even allowed. In most divorces mutual restraining orders will limit or sometimes even completely prohibit any changes to beneficiary designations while the divorce is pending!
3. Update your Will.
Texas law states that a court may not prohibit a person to execute a new will; execute a codicil to an existing will, or revoke either one before their divorce is final. (See Texas Estates Code Sec. 253.001)
Most people like to remove their soon to be ex-spouse as executor from their will, effectively taking their control over your estate away. Another thing that you could do is leave your separate property and your share of your community estate to either your children or a third party, this way your soon to be spouse will not gain or lose anything from something happening to you before the Divorce is Final. Keep in mind that if you leave assets to minors without proper guardianship or trust provisions, your soon to be ex-spouse might be appointed by the court to be in control until your children reach the age of 18. Another way to protect your minor children is to create a Kids Safety Plan, which will offer your minor children an estra layer of protection usually not offered by the average estate plan.
4. Update your Trust.
If your spouse is named as a Trustee over your assets, (of if something happens to you, your children’s assets), you might want to reconsider their appointment, especially when the Divorce is less than amicable.
5. Revisit your estate plan after your divorce is finalized.
Estate planning during divorce is just a Band-Aid, it is not a permanent solution. Particularly because you are limited in what you can and cannot do (this is why it is important to work with an experienced estate planner, because DIY or form documents most likely will create situations ripe for litigation because they did not pay attention to restraining orders, State laws or Rule 11 agreements).
Once the divorce is finalized, you are highly recommended to revisit your estate plan and address any beneficiary designations that are not regulated by your Divorce Decree.
For more guidance see our article: The Divorce is over – What do I need to do now? (or The 6 Things you MUST do once your Divorce is Final)
Attorney Gratia P. Schoemakers has helped many people cross the finish line of their divorce. We can help you create the plan that gives you peace of mind and reflects your personal wishes in case of incapacity or death.
The post Filing for Divorce? Time to update your Estate Plan! appeared first on Collaborative Divorce Texas.