Divorce can be complicated, especially when substantial assets and property are involved. Couples often have children, and a divorce can impact every aspect of a person's life. Spouses may draft a Last Will and Testament (will) during a marriage; however, that same will may not be appropriate in the event the couple divorces. Whether an estate plan has previously been drafted or you have questions about how your divorce may affect your estate plan in Northern Virginia, The Law Office of Aubrey Carew Sizer PLLC is available to provide legal guidance and answers to your questions. Consider scheduling a consultation by calling (571) 403-2619.
Estate Planning Prior to Divorce - What You Need To Know
When it comes to estate planning and divorce, there are some legal matters that couples should consider addressing before their divorce is finalized. These might include:
- Consider Changing Estate Planning Documents. According to the NAEPC Journal of Estate & Tax Planning, couples should consider changing beneficiaries in their estate planning documents. If there is no will, consider preparing one so that assets are not inherited by a soon-to-be-ex, but by intended beneficiaries. This important step will prevent an ex-spouse from having any control regarding assets prior to a divorce.
- Consider Creating a Durable Power of Attorney. It is important to consider creating a durable power of attorney and appoint someone other than your spouse if you do not feel that they can be trusted or to avoid possible mismanagement of your financial affairs by a soon-to-be-ex. A financial advisor, sibling, CPA, parent, or other person who is trustworthy may be designated as an agent under a power of attorney.
- Consider Creating or Updating Your Health Care Power of Attorney or Advanced Health Care Directive. You will want to ensure your wishes are carried out regarding any life-threatening accidents or illnesses, in the event that you are incapable of making a decision on your own behalf. Consider appointing a trusted person to make decisions on your behalf and also consider creating an advanced health care directive.
Estate Planning Following Divorce
Going through separation and ultimately divorce is stressful; with so much going on and the emotional impact, it is not uncommon for spouses to completely forget about their estate plans prior to the divorce becoming final. For those who are already divorced and need to update their estate plans, consider the following:
- Review and update beneficiaries
- Revoke an existing will
- Name a new agent under your power of attorney
- When minor children are involved, review and update your guardianship designations where necessary
- Consider a Trust
- Review any existing pre-marital or post-marital agreements
- Make certain you clearly understand every detail of your life insurance policy
Even when spouses had no will during the marriage, the time following a divorce is ideal for creating one. The period immediately following divorce is also a great time to update all aspects of your important affairs, including 401Ks, IRAs, and other retirement accounts, life insurance policies, and transfer on death (TOD) accounts. The Law Office of Aubrey Carew Sizer PLLC can help those going through a divorce with estate planning concerns.
What To Avoid With Estate Planning And Divorce
There are certain things that should not be done during a divorce regarding an estate plan. Without the permission of a soon-to-be-ex, any attempts to relocate property or money in a way that removes access by the other spouse prior to the divorce becoming final is forbidden. Examples include:
- Hiding or transferring property or assets. According to the Code of Virginia Section 20-107.3, regardless of whether property or assets are considered separate or communal marital property, attempting to hide assets will result in severe financial consequences imposed by court judges in divorce rulings. There may also be civil penalties incurred by those who attempt to transfer or hide assets.
- Whether revocable or irrevocable, do not fund a new trust. During the process of divorce, it may be unlawful to fund a new trust. Additionally, spouses cannot make changes to a non-probate transfer (revocable trusts, IRA, life insurance, benefit plans) in a way that moves assets away from a soon-to-be-ex. Additionally, creating a non-probate transfer during a divorce is prohibited.
- Insurance policies cannot be canceled, borrowed against, or cashed out when spousal or child support is involved. Policies such as health, life, auto, and disability fall under this umbrella, and funds cannot be transferred to a different account.
Keep Digital Assets in Mind During Your Divorce
Following a divorce, many people fail to consider their digital assets when reviewing their estate plans. Given that today's society is one that exists in large part online, it is important to remove permissions on certain accounts and change usernames and passwords. Whether social media accounts, email accounts, on credit/debit cards, subscriptions, or other accounts, be sure to update sign-in credentials to remove a former spouse's access to these accounts. In some situations, it may be necessary to close an existing account and open a new one, such as bank accounts, utilities, and other financial accounts.
When Minor Children Are Involved in a Divorce
Those who share minor children when getting divorced should consider certain things when creating a post-divorce will. While an ex-spouse would typically be named as guardian of the person of your children in the event of your death, an ex-spouse does not have to be named as guardian of the property of anything you may leave for your children's benefit. Accordingly, a post-divorce will should outline how you would want your assets to be used in the best interest of your children and who you would want to oversee the use of those assets (e.g., a trustee). The trustee is a trusted person who will maintain control over your children's inheritance and manage it properly; consider someone who will control your assets rather than your former spouse. Additionally, it is important to name a competent adult instead of leaving anything directly to your minor children. Minor children cannot legally own anything. Therefore, if you leave something behind to them directly, your former spouse could potentially be put in charge of those assets for the benefit of your children by the court.
Consider Scheduling A Consultation With The Law Office Of Aubrey Carew Sizer PLLC
Whether during a divorce or after it is finalized, proper estate planning is key to protecting your assets, property, and the future of any minor children who may be involved. Without an estate plan, a former spouse could end up with more control of various aspects of your life than you intended, including your finances, assets, property, and inheritances meant for your children or other beneficiaries. At The Law Office of Aubrey Carew Sizer PLLC our top priority is providing skilled legal guidance and support to those in Northern Virginia who have questions regarding estate planning in light of a divorce. Consider scheduling a consultation with our estate planning attorney now at (571) 403-2619.