Divorced? Divorcing? Don’t Forget Your Estate Planning Documents!

Estate planning clients often engage us along with their spouses. Even though each spouse signs their own will, they often coordinate their documents with one another after a major life event, such as a marriage, birth of a child, or emancipation of grown children.  These clients feel great relief as they leave their signing appointment.  They’ve just finished what they know to be an important process.  Now they can cross a nagging item off the “to-do list”, put those documents somewhere safe, and not look at them for a while.

But what if that happy couple experiences marital strife?  What if a separation is imminent or has already happened? Our family law and estate planning attorneys urge you to dust off those documents and take a careful look at them.

Reviewing Powers of Attorney

All of our estate planning clients complete health care and financial powers of attorney.  These documents appoint an individual with legal authority to make health care decisions for you and access your financial assets in the event you become incapacitated.  These documents are critical to have in case of emergency.  Nearly all our married clients appoint their spouse as their agent under a power of attorney.  But what if your spouse is soon to be your ex-spouse?  Or what if your then-spouse is now your ex-spouse?

The powers of attorneys that Bulman Dunie prepares contain language stating that the filing for divorce will terminate an agent’s appointment.  However, that relies upon the good faith of the ex-spouse not to use the document after the filing of a divorce action and/or relies upon the recipient of the document to inquire as to whether a divorce action is pending.  Additionally, the filing of a divorce action is often one of the last steps in a divorce, and may not occur until long after a separation or the end of the relationship.

Thus, we recommend our clients update their powers of attorney whenever they determine that their spouse is no longer the appropriate person to serve in that role, to ensure that an estranged spouse, not just an ex-spouse is not named anywhere in the document as your agent.  Otherwise, your ex-spouse or soon-to-be ex-spouse could have ongoing authority to make health care and financial decisions for you.

Reviewing Your Will

In addition to powers of attorney, it is important to review your will.  Under Maryland law, a judgment of divorce will automatically terminate the rights of the ex-spouse under the will even if the will still names the ex-spouse as a beneficiary.  However, many financial institutions will honor the beneficiary designations on file regardless of what any will or separation agreement might state. And, as our family law clients know all too well, divorce takes time.

Significant time can pass between an initial separation and the entry of a final order of divorce.  If you die while your divorce is pending and your soon-to-be-ex-spouse is still in your will, and/or still listed as a beneficiary on certain assets, he/she will inherit.  Moreover, a divorce makes it more likely that children will inherit, as there is no longer a surviving spouse.  It is critical to review how a child’s inheritance will be held and protected under your will.

No Estate Plan? It’s Time to Create One!

Even in the absence of estate planning documents, married couples can rely on each other in the event of an emergency.  For example, in the absence of a financial power of attorney, either spouse could access finances in joint accounts if the other is incapacitated.  In the absence of a health care power of attorney, one spouse can often act as a health care surrogate for the other in an emergency.  Divorce takes away this safety net and makes it all the more urgent to have basic estate planning documents in place to plan for incapacity or illness.

When divorce or separation requires you to review or create planning documents, contact Jeremy Rachlin, Chair of Bulman Dunie’s estate planning group, at (301) 656-1177 x305 or jrachlin@bulmandunie.com if our estate planning team can be of assistance.