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The Importance of Revising an Estate Plan After Divorce
Going through a divorce is a very strenuous time in life for the divorcing couple. While this life event is tough, it also creates a significant need to update your Phoenix Arizona estate plan. Because of the great change in personal finances, assets, and planning objectives, a revision of an estate plan is necessary for both spouses. Additionally, in nearly all cases, both the husband and wife involved in the divorce no longer want the ex-spouse to be a beneficiary of his or her estate plan. If a married person fails to change his or her estate plan after a divorce and then dies, the possibility exists that the ex-spouse may take a share of the decedent’s estate, or may take under the terms of a beneficiary designation.
While a divorce automatically terminates some of the ex-spouse’s rights, in many cases it does not, contact Hoyer Law Firm for details on the subject. Here is a partial list of items that should be reviewed upon a divorce to avoid legal setbacks down the road.
While in most states, including Arizona, there are statutes in place that will allow a divorce to automatically revoke any provision in the decedent’s will for the ex-spouse, few states have this automatic revocation for a disposition made to the former spouse in a revocable trust. It is important to revoke this trust, and create new trust with different beneficiaries as desired.
Also, if your trust is set up for your child(ren), you should consider naming a trustee other than the ex-spouse, unless you believe the ex-spouse will be a reliable and honest trustee for the child. If there is no designated trustee, most courts will typically assign the other parent as trustee. And while the beneficiary of the trust is the child, the ex-spouse will have some degree of control over the property, unless otherwise designated in the trust.
Power of Attorney or Attorney-in-Fact
Most married couples will grant each other a power of attorney. Under the power of attorney, a person (principal) grants to another (agent) the power to act on their behalf. There are generally two types of durable powers of attorney: a durable power of attorney for finances, and a durable power of attorney for health care. Depending on the terms of the document, the durable power of attorney for finances allows the agent to serve the interest of the principal in financial matters before, during, or after the principal becomes incapacitated. The durable power of attorney for health care authorizes the agent to make medical decisions for the principal if the principal cannot otherwise make those decisions. Further legal advice is available at Massapequa Divorce Lawyer.
In Arizona, there is no statute to provide for a power of attorney to automatically be revoked upon divorce. While a court may revoke it anyway, it is still wise to revoke a durable power of attorney after a divorce and create a new one to avoid potential problems.
Divorce does not generally terminate the rights of a beneficiary to the proceeds of an insurance policy on the former spouse’s life – here’s the information on QDRO in California. This rule applies even though the beneficiary may be designate in the police as the insured’s “spouse” and even though the insured may have remarried prior to the former spouse’s death. It is therefore imperative that if you would not like your ex-spouse to receive your life insurance proceeds, that you change the beneficiary designation of your life insurance policies. Rather than leaving property and life insurance proceeds directly to the ex-spouse, a good idea is to establish a trust, that can be managed by a chosen trustee, to provide for distributions for the benefit of any children on a regular and or “as needed” basis. Consult divorce attorneys with free consultation to get personalized care and attention on the issue.
Guardianship of Children
If the ex-spouse is an absentee or unfit parent, it may not be appropriate to allow for the ex-spouse to have custody of the children in the event that you are unable to provide the care. A revised estate plan can include the designation of an appropriate guardian for the children. This is not absolutely binding on the courts, but it may nevertheless weigh heavily with the deciding judge. Connect with The Law Firm of Caryn S. Fennell for sound legal advice.
If you and your spouse held property (such as real estate, or a bank or brokerage account) together under a joint tenancy title, upon your death, your surviving ex-spouse will receive full ownership rights to the property.
Severing this joint tenancy can be a simple process by creating an instrument signed by all individuals named on the title. If, however, your ex-spouse refuses to sign the instrument, a severance can still be obtained unilaterally through a court order. Severing this joint tenancy will then allow you and your ex-spouse to own the assets as “tenants in common” with a 50/50 share (unless another sharing percentage has been agreed to). This will prevent your ex-spouse from being entitled to your half of the jointly owned property, but will allow for your one half interest to be designated as you see fit.
Understandably, divorce and death are not fun things to think about, however, divorce is one of the most important times to update an Arizona estate plan – or create one. By working with a qualified attorney, estate planning can be relatively simple and straightforward. Contact the attorneys at Gunderson, Denton and Peterson in Phoenix today to learn more about what other changes should be made to your estate plan upon divorce, or to start an estate plan today.
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Phoenix, AZ 85004
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