Imagine you have divorced many years ago and remarried. Perhaps you have children with your new spouse and have been happily married for years. However, you have not changed any of the estate planning documents you had done before. Then, your family’s world crumbles as you are stricken by an accident or illness. You are unable to make health care decisions and your physician calls your Agent under your existing Health Care Power of Attorney, who happens to be your ex-spouse. In some states, the appointment of a spouse as an Agent is not be revoked by a subsequent divorce. As Agent, your ex-spouse could make decisions regarding your health care – not a situation most of us would want to be in. Of course, this would only exacerbate the emotional distress your family would be going through.
If you did not survive, your family would be devastated by the loss. They would be left with an emotional and financial void left by your absence. Your spouse knows you had sufficient assets saved in your 401(k) plan. However, upon investigation, your spouse discovers that you had not changed the beneficiary designation. Surely the law would automatically change that? No. If the beneficiary designation still lists the ex-spouse, the assets go to the ex-spouse. With other assets, the divorce might serve to terminate the designation or the bequest to the ex-spouse. However, with 401(k) and other qualified plan assets, it does not.
Next, your spouse is relieved to discover that in your state bequests to an ex-spouse are invalidated upon divorce. Under the terms of your estate planning documents, your spouse finds the assets go to your children. Finally some good news. However, your spouse finds that the ex-spouse is named as trustee and that, in your state, such a designation is not revoked upon divorce. Thus, the ex-spouse now controls those assets, too.
Of course, this nightmare scenario can be avoided. After divorce, you can change your estate planning documents to remove your ex-spouse as a beneficiary, trustee, agent, etc.
Let a qualified estate planning attorney help revise your estate plan in light of these changed circumstances.
Mr. Ronald “Chip” Morrison, Jr. is a member of the American Academy of Estate Planning Attorneys and has been engaged in the practice of law for the last 16 years. He has experience in both simple and complex estate matters and can prepare an estate plan for you that achieves your goals of passing your assets to those you wish. To learn more about how you can achieve your estate planning goals, please call our office in Metairie, Louisiana at (504) 831-2348 or contact us through our website.