Why You Should Update Your Estate Plan After Divorce

Divorce is a stressful process, and the last thing most people want when it’s over is to spend more time with a lawyer. We understand, and we don’t take that personally! Unfortunately, if you didn’t update your estate plan when you filed for divorce or while the divorce was pending, you really need to update your estate plan after divorce —as soon afterward as possible. Fortunately, Minnesota law prevents your ex-spouse from receiving an inheritance after divorce if you die before updating your estate plan; more on that below. But there are still many reasons to be proactive and update your will, trust, and other estate planning documents.

Your Life Has Changed; Your Estate Plan Should, Too

Estate planning attorneys advise their clients to at least review their estate plan anytime they have a major life change: marriage, birth or adoption of a child, death of an heir or beneficiary, even a move to a new state.

A divorce changes many things about your life, and an estate plan you made when you intended to spend the rest of your life with one person probably doesn’t reflect your goals after you are divorced from that person.

In the event of your death, your ex will probably have custody of any children you share together, and you might be fine with that. But are you fine with them having access to the assets your children inherited from you? If your children are minors, some legal adult will have to manage their assets until they come of age. If you don’t feel comfortable with your ex-spouse in that role, you will need to create an estate plan that provides an alternative.

For instance, you could create a living trust that names someone you choose as the trustee after your death, and your children as beneficiaries. That would preserve the assets for your children while eliminating your ex-spouse’s access to the funds.

Divorce Changes Your Estate Plan

Minnesota law automatically makes some changes to your estate plan either when you file for divorce, or when your divorce is final. For instance, when you file for divorce in Minnesota, if you have designated your spouse to act on your behalf in a power of attorney or health care directive, that authority is automatically revoked. Otherwise, if you were near death due to an accident a month before your scheduled divorce trial, your estranged spouse might literally have the power of life and death over you.

Filing for divorce does not automatically revoke a Minnesota will or trust. When a divorce decree is signed, an ex-spouse named in a will or trust that predates the divorce will be treated as if they predeceased you. However, because will or trust provisions in favor of a spouse are not revoked UNTIL the divorce is final, if you die while your divorce is pending, your spouse would inherit from you. And since most people name their spouse as executor or trustee of their estate, your spouse would be in charge of the distribution of the rest of your assets.

You should be aware that even if you make a new will that omits your spouse after filing for divorce, your spouse could still take from your estate under Minnesota’s elective share laws if you die before your divorce is finalized. This is because elective share laws allow a spouse to receive a portion of the estate of a deceased spouse who disinherited them, intentionally or otherwise.

It’s also worth noting that even if your soon-to-be-ex spouse does not legally have the right to act as your agent under a power of attorney, it might not necessarily stop them from trying. When you file for divorce you should, at a minimum, notify your financial institutions that you have filed for divorce and that the power of attorney is no longer valid. But as long as you are going that far, you might as well just revoke your power of attorney and create a new one.

Estate Planning Checklist for During and After Divorce

It’s important to be not only proactive, but comprehensive in estate planning during and after divorce. Unlike some states, Minnesota does not prevent you from making a new will or trust while your divorce is pending, so there’s no reason to wait until your divorce is final to do so. But estate planning isn’t done exclusively within the walls of an attorney’s office. Yes, your will, trust, powers of attorney, and health care directives are essential parts of your estate plan. But it’s likely that you have other assets that would be transferred outside of those documents. If you have a life insurance policy, annuities, investment accounts, a retirement plan at work, you have beneficiary designations. Most beneficiary designations are automatically revoked by a final divorce, but as with a will or trust, it is wiser to be proactive and name a beneficiary that you would want to take the asset after your death.

Things you should think about when planning for loved ones and assets after divorce:

• Who would you want to serve as guardian for your children if their other parent isn’t available?
• Who do you want managing your children’s money if they are not old enough to responsibly do so themselves?
• Who do you want to make medical decisions on your behalf if you are unable to make them for yourself?
• Who do you want to handle your finances if you are legally incapacitated and cannot manage your own business?
• What assets do you have that would pass outside of probate through a beneficiary designation? Have you updated your designations?
• Have you let all of your financial institutions know that you are divorcing and revoking your spouse’s authority as agent under a power of attorney?

The best way to make sure you have all your bases covered is to work with a law firm that handles both family law and estate planning. That way, you can put your divorce and your estate plan in motion simultaneously. If you have questions about estate planning or inheritance after divorce, please contact Mundahl Law to schedule a consultation.