By Amy Jeannette (“A.J.”)
There are numerous
estate planning issues that arise during a separation or divorce. There
are significant consequences that may result from failing to evaluate
the current status of your estate plan, especially if you are unaware
of your current beneficiary designations or who you have named to act
on your behalf if you were to become incapacitated, even temporarily.
of Attorney. A Durable Power of Attorney is a document in which
you name an individual to act on your behalf if you are unable to
make decisions regarding your health or finances. If your divorce
is not yet final, or if you have signed a Durable Power of Attorney
that names your spouse to act on your behalf, do you wish to have
your estranged spouse deciding what medical treatment you should have
after an accident? Are you comfortable letting your spouse have access
to and the ability to take assets out of your accounts while you are
incapacitated? You should have separate Durable Powers of Attorney
for health care decisions and for financial decisions to ensure that
the person you wish to make these decisions for you is the one called
upon to make them.
of Beneficiaries. You should review who you have designated to
receive your assets when you die. Washington has a statute that automatically
revokes the designation of a former spouse after dissolution. However,
the revocation is not effective until the divorce is final, which
can often be a quite awhile after the separation. Further, the statute
is being challenged as unconstitutional, and should not be counted
on to make the correct designation for you. Some designations that
are often overlooked are bank accounts, retirement accounts, pension
plans, health insurance, employer benefits, joint tenancy accounts,
investment/brokerage accounts and insurance policies. If you do wish
to have your former spouse as the beneficiary, you will need to rename
him or her after your dissolution. Otherwise, the statute will revoke
your designation when the divorce is final.
There is ongoing litigation regarding the statute that automatically
revokes a former spouse. In a recent case, the former spouse filed
suit to enforce the beneficiary designation on an Individual Retirement
Account. She argued that her former husband intended her to have that
account, and had intentionally left her name on the designation form.
The case went through trial and then to the court of appeals, costing
thousands of dollars in legal fees that could have been avoided had
he changed his beneficiary designation after the divorce or indicated
that a divorce was pending and stating his intended beneficiary. To
ensure that your money goes where you intended and to avoid wasting
your estate on unnecessary litigation, you should consult a professional
estate planner during your separation or dissolution proceedings.
Cards. Is your spouse a signer on your accounts? Unless you have
a written agreement regarding your joint accounts, you should consider
closing the joint accounts and opening a new account in your own name
so that your estranged spouse does not have access to account numbers,
bank codes and your funds.
If you and your spouse have formed any partnerships, you should review
the partnership agreement and consider whether you wish to retain
an interest in the partnership. Considerations include who will be
running the business, balancing the books, and making the day-to-day
decisions about the business. If your name remains on a business that
is being run by your spouse, you may be liable to creditors and taxing
authorities for any unpaid debts or taxes of the business.
and Testament. Do you have a Will? Does it name your spouse to
distribute your assets? Does your Will leave your assets to your former
spouse or to in-laws? As with the designation of beneficiaries, state
law revokes any bequest to your former spouse after the divorce is
final. However, it does not apply to other in-laws, and may not apply
to the designation as Personal Representative. In addition, it would
not take effect until after your final decree of dissolution. If you
wish to leave your spouse in your distributive plan, you must revise
your Will after the divorce or have an interim Will that includes
specific language regarding the pending dissolution.
make changes by writing on your original Will. By doing so, you risk
voiding the entire document. If the formalities of a Will are not
preserved, including having two witnesses to any modifications or
codicil, among other legal requirements, the whole document could
be considered revoked.
For more information on these issues or other estate planning needs, you
may contact attorney Amy Jeannette (“A.J.”) Goertz at email@example.com
or (206) 338-7792.