Do I need to update my estate plan after I get divorced?
In Massachusetts, a divorce generally disinherits your ex-spouse from your Will. Any other provisions of the document will read as though your ex-spouse predeceased you. Similarly, documents like your health care proxy and durable power of attorney may have language in them that automatically revokes the document upon divorce.
Given the automatic changes and potential gaps in your old estate planning documents, you will likely need to make 5 updates to your estate plan after your divorce is settled to protect yourself and your children from legal complications.
Update your health care proxy. If your spouse is named in your original health care proxy then you should create a new document naming a new person and one backup/alternate to make healthcare decisions for you in the event of incapacity. You should also take the opportunity to make sure that your health care proxy includes an advanced directive and proper HIPAA authorization to ensure there are no hiccups. It’s important to note that although the health care proxy can include an advanced directive, it is merely a guideline for your health care proxy and is not an enforceable set of rules in Massachusetts. You may also want to consider completing a medical order also known as a MOLST (medical order for life sustaining treatment), which is separate from your health care proxy and would generally be done through your primary care provider.
Update your durable power of attorney for finances. Similar to your health care proxy, you need to create a new durable power of attorney and shred the old one. You also need to notify any financial institution that has a copy of the old one to make sure they understand it is no longer valid. When drafting your new durable power of attorney, you need to be extra careful with the language because unlike your prior durable power of attorney which probably gave full power (or general power) to your ex-spouse to access and control everything, your new document may need to cut back a lot of that discretionary language assuming you don’t want to give a person other than your spouse such complete discretion. For example, carefully examine the gifting provisions, the ability to alter/update death beneficiary designations, and the provisions regarding the sale or transfer of real estate, to name just a few.
Update your Will. Although there are statutory laws in place to automatically adjust your Will after a divorce, you should still create a new Will to specify who gets what and who you would like to be in charge of administering your estate (known as the personal representative in Massachusetts). If naming minor children as beneficiaries, then you should make sure to name a custodian to manage the money for your children - otherwise, your ex-spouse could be in control of your children’s inheritance (which I’ll get into a little bit deeper in #4).
Create a Trust. Now that you no longer have shared/joint property, many of your assets (particularly your real estate) are now at risk of going through probate upon your death. To prevent that from happening, you can put a living trust in place and name a successor trustee to step into your shoes immediately upon your death. If you have minor children (or young adult children), then you will want to include provisions to protect your children’s inheritance from creditors, divorce, and lawsuits until they are of the age that you think is appropriate for an outright distribution. If you go the trust route, then you should make sure your Will is updated to a “pour-over” Will and has provisions consistent with the trust document to ensure your children’s inheritance is protected and not within the reach of your ex-spouse.
Update beneficiary designations. Even if your divorce agreement clearly stipulates otherwise, you should update your 401k, other retirement accounts, and life insurance policy death beneficiary immediately (assuming it doesn’t go against your settlement agreement). If you have minor children or young adults as the contingent beneficiaries then you may want to name the trust as the new primary to avoid the risks mentioned above.
It is also important to note that you should have your estate planning attorney carefully review your divorce settlement agreement prior to drafting the estate planning documents to make sure the documents are drafted in accordance with any restrictions or limitations in place.
If you have any questions about updating your estate plan after a divorce, then feel free to give me a call at 781 202 6368 or email me at jlento@perennialtrust.com to schedule your free personal consultation.
I’m always happy to help,
Joseph M Lento, J.D.
Your local estate planning attorney
Perennial Estate Planning
477 Main Street
Stoneham, MA 02180
