Rowley Law

How Does My Estate Plan Work After a Divorce?

  “It is good business that, when you get divorced, you revise your estate plan to reflect your current thoughts.”

A divorced man with two adult children is still working.  He plans to work at least another 10 years. He did his will a few years before he divorced and hasn’t made any changes. As it stands now, the will leaves everything to the spouse and, if she predeceases him, then to his two children.

Should he change his will now that he’s divorced or is his wife automatically excluded because of the divorce?

Hometown Life’s recent article, “After divorce, examine all aspects of estate planning,” says that this gentleman definitely should redo his estate plan.

If he leaves his estate plan as it is, it could mean a fight over interpretation.

In most states, the probate court typically may find that because he failed to make a change after his divorce, it was the man’s intent to continue to have his ex as his beneficiary.

He should speak with his estate planning attorney—and soon—to make things crystal clear and to remove the risk of fights and costly legal battles.

At the same time when he’s redoing his will, he should also review his medical and durable powers of attorney.  People often forget to change their beneficiaries on insurance policies, IRAs, or investment accounts. These also need to be updated.

For individuals, whenever you have a change in your family situation, like a birth, adoption, death, or divorce, you should review your estate plan.

Whether you need changes to your estate plan depends upon your individual situation. If a person is divorced, it’s a dead giveaway that his estate plan needs to be redone.

Reference: Hometown Life (February 7, 2018) “After divorce, examine all aspects of estate planning.”

More Reasons for Estate Planning

“There are two types of powers of attorneys.”

Estate planning is critical for everyone. That goes double for seniors.

Basic estate planning means you’ve drafted and properly recorded legal documents, such as wills and powers of attorneys, and they’re all up-to-date. Wills written 20 years again after a child is born are now severely dated and possibly inaccurate.

There’s a fair chance that things have changed, and the will may be missing all of the grandchildren or still includes individuals whom you no longer want as primary beneficiaries.

The Herald-Standard explained, in its recent article, “Your Financial Future: Estate planning,” that powers of attorney come in two general flavors.

One power of attorney is for health care. This document designates an individual and gives him or her the authority to make health care decisions for you, if you are incapacitated. Capacity is the ability to understand your options and pick the best one. There are times when people may not have capacity temporarily, such as when they are in a coma. It can also be long term, when a person suffers from dementia.

The other type of power of attorney is for financial matters. This permits the appointed individual to make decisions concerning paying your bills and those that keep your family’s financial life functioning. Note that powers of attorney end upon your death.

Powers of attorney are granted under state laws. Because of this fact, federal government agencies don’t typically recognize them.  Since federal law supersedes state law, your power of attorney may not be recognized by agencies, like the Social Security Administration.

The Social Security Administration has its own form which appoints a personal representative. The agency requires that its own form be used to make decisions on behalf of another. If someone may need this, it’s prudent to prepare Social Security Administration paperwork in advance while the senior can still make sound decisions. This may be called for, if he or she moves into a nursing home, and their benefit checks are mailed to their old address. Yes, this is another good reason to receive your payments by direct deposit.

That individual may also want to set up a Social Security Administration account online at Social Security/myaccount. Changes can be made here at any time without the need to speak to a Social Security Administration employee.

Reference: Herald-Standard (November 23, 2017) “Your Financial Future: Estate planning”

Here's a Simple Estate Planning Checklist

“If you are like most people, when you hear the words “estate planning,” you probably think of writing a will, to explain who will get what you own when you die. The problem is, a will has little or nothing to do with you. It’s all about planning for someone else. In reality, estate planning is about much more than writing a will.  It is also about taking care of you while you are alive, should you become incapacitated and unable to make your own decisions.”

Forbes’s recent article, “The Biggest Estate Planning Mistake People Make,” offers a nice checklist of the key documents to complete as part of your estate planning—perhaps even before drafting your will. The names of these documents vary from state-to-state, but the following are essential ones to ask an estate planning attorney to draft for you.

Advanced Health Care Directive or Medical Power of Attorney. With this document, you designate the individual (known as a “health care agent”) who you want to make decisions about your health care, if you become too ill or injured to make them for yourself.

Living Will. This details the kinds of medical care and treatment you want and don’t want to receive, if you’re close to death and there is no prospect of a recovery. Your health care agent will have the power to make sure your wishes are followed. A living will may be part of an Advanced Health Care Directive, but in some states, they’re two separate documents. A living will lets your family know exactly what you want to happen for your treatment.

Durable Power of Attorney. In the event you become incapacitated, your debts need to get paid, like the mortgage and the car loan. Your investments must also be managed. A Durable Power of Attorney names a person during your incapacity to manage your finances. He or she can write checks and speak with your financial companies.

A Durable Power of Attorney is different from a plain old Power of Attorney. The POA is no longer legally valid, when you become incapacitated. When that happens, you need a Durable Power of Attorney.  Ask your financial institutions and real estate title companies about their requirements for this, because some are rigid. They might want you to use theirs.

Revocable Living Trust. Some people with larger holdings elect to avoid problems with Powers of Attorney and create a revocable living trust. This acts like a super power of attorney. Banks must comply with their terms. With a revocable living trust, you transfer title of your assets to the trust and name yourself as trustee, so you can continue to manage and benefit from those assets as you did before they were in the trust. If you can’t act as the trustee because you become incapacitated, your designated successor trustee will manage the trust. This doesn’t eliminate the need for a Durable Power of Attorney—you’ll still need that document to identify the person you want to manage your retirement accounts, because those types of accounts cannot be transferred into a living trust.

HIPAA Release. This is the federal Health Insurance Portability and Accountability Act, which prohibits your doctors from discussing your medical condition and treatment with anyone, except those you name on your HIPAA form.  Only these individuals will have full access to your healthcare team.

Organ Donation Authorization. If you want to donate your organs when you die for the benefit of others, make your wishes known on your driver’s license or register with an organ bank or hospital. Let your family and your health care agent know about this choice.

Reference: Forbes (August 16, 2017) “The Biggest Estate Planning Mistake People Make”