How Divorce Affects Your Estate Plan - Melissa Pearce & Associates, PLC

Divorce impacts almost every aspect of your life. After a long and contentious divorce, you may have spent hours or even days arguing about your assets, your children, and your rights. However, setting yourself up for success after a divorce does not end when the divorce is finalized. You also need to understand how divorce affects your estate plan. Making updates to reflect these changes means you can have peace of mind that, in the event of your death, your loved ones will be protected and your wishes honored. Talk to the experienced Michigan divorce lawyers at Melissa Pearce & Associates to learn more about how your divorce affects your estate plan.

What Does a Divorce Decree Do to Your Estate Plan?

When a divorce decree is finalized, it triggers certain legal changes to your estate plan. Two notable effects are that your ex-spouse will no longer automatically serve as your personal representative, and it also revokes your ex-spouse’s right to receive property from your Last Will and Testament (will). However, there are countless aspects of an estate plan that a divorce decree will not automatically fix. Assuming that most people want to set up their estates to reflect their divorce, it is of critical importance to review your whole estate plan to ensure that at your death, your assets are distributed according to your wishes.

What Documents Do I Need to Update?

As discussed above, there are a few automatic changes that arise when a divorce decree is finalized, but these statutory provisions are usually not sufficient to reform the entire estate plan to reflect changed circumstances. As such, you should be sure to review all of your estate plan documents after a divorce.

Wills

Although a divorce decree revokes your ex-spouse’s right to receive assets at your death, the will generally still needs to be updated after a divorce. Under Michigan law, if your will still names your ex-spouse as a devisee, then during probate, the court will redistribute those assets to an alternate beneficiary, or if there is no alternate, then to the residue of your estate. If, like many people, you were planning to leave a significant portion of your estate to your spouse, this automatic change could cause these assets to go to an unintended beneficiary. Consider consulting with an attorney to understand the potential consequences of your will.

Also note that if you have minor children when you die, their surviving parent will generally be designated their legal guardian. If you are concerned about your ex-spouse being the primary caretaker of a minor child, consider updating your will to designate a guardian.

Trusts

Note that these rules do not apply to revocable trusts. Many people opt to create a living trust to manage their assets, rather than devise them by will. If your ex-spouse is named in your trust, be sure to amend those trust documents if you no longer wish them to serve as a trustee or be named as a beneficiary. If you and your spouse planned your estates together, then you likely have already discussed the trust during the divorce proceedings. Because these types of trusts are generally revocable, work with an attorney to review your options for reforming or even dissolving these trusts after the divorce is finalized.

FAQ: What Are Special Needs Trusts?

Retirement Accounts and Insurance Policies

Upon death, retirement accounts like IRAs and 401K’s, pensions, as well as life insurance policies, will pay out benefits to designated beneficiaries without going through the probate process. You likely designated a spouse as a beneficiary on one or more of these accounts. When you and this spouse divorce, however, it does not necessarily automatically terminate their designation. According to Michigan Statutes Section 552.101, a divorce or separate maintenance judgment may determine the spouse’s rights with regard to life insurance policies. Divorce decrees must determine each spouse’s rights with regard to:

Vested pensions
Accumulated contributions in any pension, annuity, or retirement system
Unvested pension, annuity, or retirement benefits

You may not be able to freely remove your ex-spouse as a beneficiary if they were awarded a share of these interests in the divorce. Speak with a lawyer to determine whether you can update beneficiary designations post-divorce.

Any Other Estate Planning Documents

If you have built a robust estate plan, you should review every document, including advanced directives, powers of attorney, deeds, and any other legal instrument that accounts for what should happen upon your death. Remember that divorce does not automatically revoke or modify any of these instruments, so consider working with your attorney to ensure your estate plan reflects your new circumstances post-divorce.

Is My Estate Plan Valid if My Divorce Is Not Finalized?

Even if your divorce is not final yet, there may still be some steps you can take to protect yourself. A divorce is not final until the divorce decree is entered, so you and your spouse are legally married until that time. While you cannot attempt to hide assets from your spouse, you can begin to update some of your estate planning documents, such as your living will, which sets forth your preferences for medical care in the event that you become incapacitated. Similarly, if you do not want your spouse to be able to make legal decisions on your behalf or manage your financial affairs while the divorce is pending, consider revoking or amending your power of attorney forms. You are also at liberty to change your will at any time, even before your divorce is final.

Discuss How Your Divorce Affects Your Estate Plan with an Experienced Family Lawyer

Trust Melissa Pearce & Associates to represent your interests before, during, and after a divorce. Our Oakland County and Wayne County, MI divorce attorneys have handled cases across the spectrum of family law. We handle each case with compassion and care and apply our knowledge of Michigan law to ensure our clients’ goals and objectives are met. Call us at (248) 397-9606 or use our contact form to tell us more about your case, and allow us to help you determine how your divorce may affect your estate plan.

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