For couples facing divorce, the accompanying changes may seem endless. An often overlooked, yet extremely important consideration for divorcing couples is a review of the existing wills and other estate planning documents such as a health care proxy, financial power of attorney, and living will. Other documents that should be reviewed are beneficiary designation forms for retirement assets and life insurance policies. Often, a party’s recollection of the beneficiary designations and other provisions is not consistent with the documents. All of these forms should be looked over carefully upon a divorce to ensure that the documents reflect each party’s intentions and conform to the Separation and Settlement Agreement entered into by the parties. If there is a prenuptial agreement in place, it should also be reviewed to determine what the other spouse is entitled to in the event of death.
An essential point to remember is that once an action is filed in New York, and sometimes as part of a written agreement as part of the Collaborative Law process, the parties are subject to Automatic Orders, under 22 NYCRR section 202.16-a. These Orders place restrictions on the transfer of property during the pendency of a divorce. In spite of this, a party can start planning for after the divorce. With a new will, a party may leave property in accordance with his or her wishes. He or she may also choose an executor to carry out the provisions of the will.
A will may also contain guardianship decisions for the parties’ children in the unlikely event that both parents die before the children are emancipated. It is recommended that the appointment of guardians be discussed and agreed upon during the divorce process, to avoid conflicting provisions. This can result in unintended consequences. The decisions should be incorporated into the Agreement and each party’s will. A time frame for preparing and executing new wills should be included in the Agreement.
Many assets pass outside of the will to the named beneficiaries. This is another reason to carefully check the beneficiary designation. Once the distribution of property is memorialized, the beneficiary designations should be updated on life insurance policies, retirement assets such as IRA’s and 401(k) s, and transfer on death accounts.
Upon divorce most individuals chose new health care proxies upon a divorce and revoke existing powers of attorney.
While estate planning is an understandably difficult subject to discuss, especially during an already stressful time like divorce, making adjustments to the parties’ estate planning is often necessary. Estate planning documentation must conform to specific laws of the state in which they are being executed, and should be prepared by an experienced attorney to ensure that all documents are properly prepared and executed. Most people feel more secure once they know that the decisions that they have made will be carried out by the documents they have carefully put in place.