How Divorce Affects Your Estate Plans

Divorce is a monumental life change, one that requires an updated estate plan to reflect your new circumstances. While most people wait until the divorce goes through before they revisit their will, power of attorney, trusts, and other arrangements, ideally the process should start as you know you intend to file. Given that North Carolina requires a separation of one year and one day before a divorce can be filed, there will likely be a considerable period of time in which you are separated, but not divorced. This can have a monumental impact on your estate if you pass away prior to divorce.  Reasons why include:

  • The law regards you as legally married until the divorce decree goes through
  • If you pass away or become incapacitated before the divorce is official, your spouse could still receive most (if not all) of your estate and control your affairs

This situation is likely not the outcome that you want, so a complete review of your estate plan will limit your spouse’s claim to your estate and ensure that it goes to your chosen beneficiaries instead.

Your Will

North Carolina law states that after the granting of an absolute divorce, all provisions in your will that favor your former spouse are no longer in effect. As explained above, the exclusion does not take effect until the divorce, so seeing an estate planning attorney to update your will is one of the first steps you should take after filing for divorce.

Your Trusts

Trusts are generally interpreted the same way as wills, provided they are revocable when you die. If you have a revocable living trust, provisions for your former spouse will be nullified by divorce. If, on the other hand, you have an irrevocable trust that names your ex as a beneficiary, you will run into problems because its terms cannot be changed. For this reason, irrevocable trusts should include language to state that divorce will remove any former spouse’s claim.

Your Power of Attorney

If you created any form of power of attorney designating your spouse as agent, their status is revoked when you file for divorce (unlike wills, which are valid until the divorce goes through) and any named successor agent will assume responsibility. Guardianships are different: if your power of attorney appointed your spouse as guardian, filing for divorce does not invalidate that arrangement, so change your power of attorney now.

Your Healthcare Power of Attorney

If your healthcare power of attorney names your spouse as agent, the arrangement is revoked on divorce, but not until then. To prevent the possibility of your spouse being empowered to make decisions about your medical treatment, see an estate planning attorney as soon as possible.

Your Insurance Policies and Pension Plans

If you designated your spouse as a beneficiary on a pension, life insurance policy, annuity, or any other contractual arrangement involving ongoing payments, divorce would generally eliminate their rights unless your property settlement agreement provides for the designation to remain in effect. If you don’t want them to keep benefiting from such an arrangement, terminate their beneficiary status as soon as possible. Financial institutions have no way of knowing that a divorce has occurred and may make payments that you have to fight to get back.

Contact Us

If you are in the process of getting a divorce, Haas & Associates can help you protect your estate by ensuring that every beneficiary designation and legal document are updated. To schedule a consultation with one of our estate planning attorneys, contact us or call (919) 783-9669 today.