The Impact of Marriage and Divorce On Your Estate Plan

Maybe you’re a long-time single who never planned to marry, but you’ve been diligent and responsible about creating an estate plan nonetheless. And now you’ve just gotten engaged! Or maybe you’re a forever-married person who suddenly finds yourself going through a so-called “gray divorce.” You, too, have a well-thought-out estate plan with the partner you’re suddenly now divorcing. 

Most major life events, including marriage and divorce, have a major impact on your life and, accordingly, your estate plan. These events can significantly impact the distribution of your assets if they are not properly addressed. Here’s what you need to know to ensure that your estate plan reflects your current wishes.

Steps To Take Upon Marriage

If you have a will and are planning to marry, it’s important to update your will to include your spouse. If, upon your death, you die testate – that is, you have a valid will – and your current spouse is not provided for in your will, New York law allows your spouse to take that portion of your estate to which he or she would be entitled if you died intestate, which means without a valid will.

A spouse’s intestate share, so long as they did not waive their rights in a pre-nuptial, post-nuptial or other agreement, is generally $50,000 plus one-half of the remaining estate if there are children. If there are no children, the spouse is entitled to 100% of the estate. Still, it’s best to update your will and address what you want your spouse to receive and not have your spouse rely on the statutory intestate provisions.

In addition to updating your will, there are other things to think about and address in your estate plan: 

• Healthcare – A healthcare proxy, also known as a durable power of attorney, designates someone to make medical decisions for you in the event that you become unable to do so. Many people name their spouse as their healthcare proxy. This is the time to consider making your new spouse your healthcare proxy.
• Real Property – If you own real property, you must decide whether you should include your spouse on the deed. Doing so will allow the property to avoid probate if you should predecease your spouse. It also protects your spouse from certain creditors and inheritance taxes. 
• Beneficiary Designations – Many types of assets require you to name a beneficiary, and these assets pass directly to the named beneficiary or beneficiaries without the need for probate. These include life insurance, bank accounts, pensions and IRAs. If you haven’t updated these documents to identify your spouse as a beneficiary, your spouse may be unable to access or receive these funds. 
• Business Matters – If you own a successful business, are a high-wealth individual or have significant assets, consider creating a trust to hold your property during your lifetime and name your spouse as beneficiary. This will minimize your spouse’s taxes if you predecease him or her. 

Steps To Take Upon Divorce

If you are divorcing, you will want to make certain changes to your estate plan. However, it is vital that you wait until your divorce is complete before making these changes. The filing of a divorce complaint typically places a hold on all marital assets to prevent the transfer, sale, or destruction of shared property. The judge in your case will likely look unfavorably on any attempt to alter the plan before a divorce decree is issued.

Note that New York law takes a practical approach to the post-divorce impact on wills. There is an automatic revocation of will provisions related to the former spouse that involve will bequests, appointments or fiduciary roles you assigned to the spouse you have divorced. However, provisions that concern children or assets not made in favor of your ex-spouse remain intact unless you make express modifications. Because this is a relatively complex area of the law, it’s critical to contact a Long Island will attorney to understand how to amend your estate plan. Once your divorce is final, you should consider the following changes to your estate plan:

• Estate Executor – It’s fine to leave your ex-spouse as executor, but this should be a carefully considered decision in light of the change in your marital situation. Think about whether an adult child, a sibling or a trusted friend would better take on that responsibility for you. 
• Beneficiary Designations – Important joint assets such as life insurance policies, checking and savings accounts, investment accounts, IRAs and 401Ks typically ask you to name beneficiaries. These assets pass outside of your will and go directly to the beneficiary. It’s important to rethink who you would like to have as the beneficiary on each of these accounts once you are divorced. Again, it’s fine to keep the spouse you are divorcing as a beneficiary, but it should be a carefully considered opinion. Any account that is not affected by the divorce – that is, your individual life insurance policies, bank accounts, 401Ks etc. – should remain solely in your name and will likely need a different beneficiary—unless, again, you want your former spouse to inherit the balance of the accounts.
• Healthcare – You should update your healthcare documents to ensure you are comfortable with the person you name to make healthcare decisions on your behalf after your divorce.
• Powers of Attorney – If you have granted your ex-spouse financial power of attorney, they will retain access to your personal assets if you become incapacitated. You should carefully consider replacing your ex-spouse with another trusted friend or family member.

Contact Davidow, Davidow, Siegel & Stern

Significant life events, whether through marriage or divorce, can dramatically alter your estate plan and result in unintended consequences. It’s important to reach out to your Long Island will attorney before these significant events actually occur. By proactively revising your will and other estate planning documents when these events happen, you can ensure that your estate is handled according to your wishes and that your loved ones are provided for as intended. Contact us today and let us know how we can help you.