Creating an estate plan is essential regardless of the size or nature of your estate. When making your plan, your lawyer undoubtedly told you to revisit it regularly, especially after critical life changes. Divorce is one such change. Separating two intertwined lives is never easy, emotionally or financially. You must face significant changes in your relationship with your spouse, kids, in-laws, and shared friends. Major financial changes are also on your mind. But one thing that is often overlooked in the midst of divorce proceedings is the importance of protecting assets from divorce by reworking estate planning documents.
Luckily, the Washington State Legislature recognizes that many people fail to revisit their estate plans post-divorce. Therefore, it has created laws that help ensure that your ex spouse won’t inherit after you die. And while that provides a modicum of relief, it is risky to rely on such laws.
WASHINGTON STATE LAW. Any estate plan created while you’re married likely names your spouse as beneficiary and heir to most of your estate. If you fail to revisit your plan after divorce, theoretically, your ex spouse still inherits your assets when you die. But the Revised Code of Washington Section 11.12.051 seeks to lessen this unfair result by invalidating portions of your Will that benefit your spouse after divorce. The law essentially states that an ex spouse will not inherit unless you included specific language in your Will preserving inheritance rights even after divorce. In the absence of such a provision, state law mandates the estate pass on as if your ex spouse had died before you.
This law was enacted with the best of intentions and can stop unfair results from happening. However, no law covers every eventuality, and each estate is unique. For instance, if a provision in your plan was that an in-law inherits part of your estate or is to serve in a fiduciary position for your estate, that provision is not nullified post-divorce. This and any number of other factors may work against your wishes. The only way to eliminate confusion and ensure that your intentions are honored is to rework your estate plan as soon as possible after finalizing your divorce.
PROTECTING ASSETS FROM DIVORCE. Even if you didn't create a Will before your divorce, this is a great time to make one. The divorce process already has you thinking about your future. So why not take the plunge and get all of your ducks in a row now? If you do have a Will, taking the time to go over it with your lawyer and think through its provisions is time well spent. Although state law essentially ignores parts of your Will that left money and property to your ex, unless you create a Will that reflects your new desires, you have no control over how those assets are then distributed. Supposedly, the assets will pass as if your spouse died before you.
REASONS TO UPDATE YOUR WILL. But do you even remember what those provisions in your Will are? Who did you list as “next in line,” if anyone? Do you still want that person to inherit or serve as Personal Representative of your estate? Most likely, when you rework your Will you’ll be surprised at how much the intervening years have altered your wishes. You may even be surprised at some of the decisions you made 15 or 20 years ago. Perhaps you stated that if your spouse dies before you, or you die at the same time, your spouse’s children from another marriage inherit your assets. Or perhaps you bequeathed a portion of your estate to your spouse’s best friend. Or maybe you named your ex's brother as your Personal Representative. Taking the time to ensure that your downline is intact and matches your current wishes is essential to protecting your assets from ending up in the wrong hands after you die.
Also, suppose that you originally named your brother-in-law and his wife as guardians of your children. But now your ex brother-in-law hates you and is the last person you want raising your kids. If you and your ex happen to die and your Will states that your brother-in-law is guardian, there is a strong chance your children will grow up in the home of someone who hates you.
HEALTH CARE DIRECTIVES AND POWERS OF ATTORNEY. When you create a Will, it is typical to sign peripheral documents like Directives to Physicians and Powers of Attorney. These documents ensure that if you are incapacitated, someone you appoint can:
* Make healthcare decisions for you;
* Make legal decisions for you; and
* Make financial decisions for you.
Directives to Physicians also dictate your wishes regarding being kept alive by life support if you enter into a vegetative state. If you appointed your spouse or a friend or family member of your spouse to make these critical decisions, you may want to update these documents as well.
TRUSTS. While married, many couples create Trusts for themselves or their children. In most instances, they name one another as beneficiaries or Trustees who control the distribution of assets. If you do not revisit these Trusts and change the designations, you may end up with your ex having control of assets after you pass.
WHAT ABOUT NONPROBATE ASSETS? You may know that certain assets do not pass through probate. Because you specifically name a beneficiary when forming these assets, they do not have to go through probate to get to the intended recipient. Nonprobate assets include life insurance policies, retirement accounts, pensions, payable-on-death bank accounts, and transfer-on-death investment accounts. You should change the listed beneficiaries to reflect your current wishes after divorce.
WE CAN HELP. We have 26 years of experience in estate planning matters. Our firm has helped hundreds of clients with their estate planning needs. We know your concerns. We know the hardship and emotional upheaval of divorce, and our goal is to make this process as peaceful and stress-free as possible. Afterward, a divorce, we will work with you to ensure your estate plan properly reflects your current wishes. So call us directly or contact us online today for a consultation.