Why Estate Planning & Divorce Are Interconnected
Posted on April 10, 2024 by Elisa Valentino, One of Thousands of Life Coaches on Noomii.
There are many benefits to addressing estate issues during divorce for ensuring greater self protection.
Most people going through divorce are not thinking about estate planning, With all the emotional turmoil and shifts in lifestyle, it can be the furthest thing from one’s mind. The thought process might be to worry about this after the divorce is finalized.
However, the truth of the matter is, divorce and estate planning are interconnected and being proactive about your assets with a Trust & Estates attorney while in the process of your divorce is in one’s best interest.
Divorce Impacts More Than Your Day to Day Finances
When it comes to your financial health, the obvious issues that most individuals are focused on during divorce include meeting day to living expenses and long-term financial wellness post-divorce. Less obvious aspects impacted by divorce and equally important “include your beneficiaries, asset distribution, and roles of individuals like executors or trustees, necessitating plan updates,” according to Richard Gans, ACTEC (The American College of Trust and Estate Counsel) Fellow.
Focused on negotiating issues such as spousal and child support, visitation and the division of marital assets, (not to mention, emotional pain, where to live, how to adjust to your non-married, single and co-parenting life and a gazillion other stressful factors), it is really wise to have a working knowledge of the “what ifs” when it comes to estate law.
In fact it is a good idea for your divorce lawyer and estate planning lawyer to work together and be on the same page for full protection of you and your interests.
As a coach, I assist my clients with a checklist of professionals to consult with in order to cover all the important legal and business foundational bases of your life and this includes access to estate lawyers.
General Estate Planning Do’s & Don’ts During Divorce
Once a divorce is filed, there are automatic orders which go into affect which prevent married individuals from doing certain things as it pertains to their estate, with the laws varying by state, so it is important to check out the specifics for the state within which you reside.
According to Shannon McNulty, Estate & Trust Attorney at The Village Law Firm in New York City, the automatic orders in New York include the prevention of asset transfers and excessive spending. It also prohibits changing beneficiaries for life insurance, tax deferred retirement accounts. “If you change these two shortly before filing, it’s legal, but a judge may not always look kindly on this unless there are warranted reasons such as one spouse having a gambling problem or other addiction,” according to Ms. McNulty.
On the flip side, following divorce filing, automatic orders do not restrict changes to healthcare proxies, powers of attorney, and wills and revocable trusts. In fact, it is highly recommended that you review these estate documents for necessary changes, since you are still legally married until the judgement of divorce is finalized.
For example, if your spouse is named as your healthcare proxy, which is for medical decisions, and/or your power of attorney, which is for money decisions, you may want to change these documents as soon as you file for divorce in the event you become incapacitated. This will prevent your future Ex from making decisions on your behalf if you are unable to do so and put the decision making in the hands of someone else that you trust.
Safeguards If You Become Incapacitated
If you do not have a living will, healthcare proxy and/or a power of attorney, you may want to consider getting them once you file for divorce.
Unlike your will, which provides guidance for after you die, a living will and power of attorney are only valid while you’re alive. You may want to assign someone that is not your soon-to-be ex-spouse in the event you become incapacitated.
Working with an estate planning attorney is your best bet as soon as you file for divorce to educate yourself and implement any necessary measures to insure the best possible protection.
Till next time,
Elisa
