After navigating the turbulent waters of a divorce, many clients have had enough of lawyers and accountants to last a lifetime. Nevertheless, there are many legal and financial matters that should be attended to in order to protect you and your family from unintended consequences, or frankly, an outright mutiny among your family in the event of your death or incapacity.
New Will. In most cases, you will want to change your Will following a divorce. Very important provisions, like beneficiaries, executors, trustees and guardians of your children will likely need changing. The Texas Estates Code provides that all provisions in favor of a former spouse are void. Nevertheless, there is no substitute for a new Will that clearly states your new dispositive plan even if the statute prevents assets from passing to your former spouse under your existing plan.
New Representative Documents. You will also want to change your Financial Power of Attorney, Medical Power of Attorney and the designation of the personal guardian of your person and estate in the event of incapacity. Again, there are statutes that will void the appointment of a former spouse as your agent or guardian, but, for example, if you had designated your sister as your successor agent, she may have to produce a certified copy of your divorce decree before your doctor or banker will even talk to her.
Bank and Brokerage Accounts. Many times, following the property division, bank and brokerage accounts are retitled, especially if they are being split. However, one may be tempted to continue the use of an account in their name, especially if that account was awarded to them in the divorce. Care is necessary here, though, because many accounts can have a “pay-on-death” (or POD) designation in favor of a former spouse. In addition, there could be rights of survivorship or actual beneficiary designations applicable to these accounts that should be examined and changed accordingly.
Beneficiary Designations of Life Insurance Policies. Again, if the policy is awarded to you in the divorce, it may belong to you, but on your death, it will pass to the designated beneficiary. There is a provision in the Texas Insurance Code that provides that a designation in favor of a former spouse is void, but there are cases where, under certain circumstances, a former spouse can be successful in claiming the benefits.
Beneficiary Designations on Retirement Accounts. These assets are often overlooked in the divorce wrap up because there are certain accounts that cannot be changed before the divorce is final. Thus, the beneficiary designations should be examined and changed accordingly when the divorce is final.
Before closing, it is important to point out that you may actually want your former spouse to remain a beneficiary and executor of your Will, trustee, guardian, beneficiary of retirement accounts or life insurance policies. In light of the various statutes that attempt to void these appointments and designations, it is not sufficient to merely leave your former spouse under your existing documents. Rather, it is important that you actually re-designate your former spouse following the divorce in newly executed documents to avoid the application of the statutes.
Don’t let your ship sink before you get to the harbor. Following your divorce, pay attention to these important planning matters. If you need help with your planning, we can guide you safely home. For any questions on this blog post or any other estate planning matter, please feel free to contact me at (214) 744-3700 or firstname.lastname@example.org.