When you go through a divorce you essentially declare to the world, “I’m going to completely reassess my life. I’m not going to have the same legal commitments or the same family anymore.” Divorce is oftentimes a painful and messy time in life, and after a divorce, all you want to do is heal. You want to forget about everything from the past and make a fresh start.
Start by reassessing your estate plan.
We’ve all heard stories of how a dreaded ex-wife or long-forgotten ex-brother-in-law gets a large inheritance because of an outdated estate plan. So, what’s holding you back? You probably just paid a lot of money to an attorney, and you’re not about to pay even more to another attorney for an estate plan, right? You’re thinking, “Will this legal problem never end?” We’re here to assure you that it will. As an estate planning attorney in Green Bay, we’ve helped many suddenly-single men and women revise their estate plans to reflect the new reality of their lives.
Your divorce will have a dramatic effect on an estate plan.
When you divorce, you pulling apart your legal relationship with a spouse. Most of your estate plan documents will be affected. Typically, this will fall under Wis. Stat. §854.15. This statute revokes gifts made in “governing documents” that transfer wealth at death, such as a Last Will and Testament or a Revocable Living Trust, to your former spouse and relatives of your former spouse. The same statute will also revoke nominations for your former spouse, or your former spouse’s relatives, to serve in fiduciary roles. Examples of fiduciary roles would be as a trustee of a trust or personal representative of your probate estate.
Check your beneficiary status on all accounts.
Despite the protection this law gives, it is important to review how you are giving gifts to your heirs. If you are relying on beneficiary statuses, then you are in effect relying on third parties, such as a bank or a life insurance company, to give the gift for you. These third parties may not know of their responsibilities under this law or the current state of your divorce. There are also some gifts after death that may be regulated under conflicting federal laws, such as your 401(k). If that happens, then the federal law will win. Therefore, it is essential that you check your beneficiary status on all accounts once you finish a divorce and not simply rely on Wisconsin’s automatic revocation law.
Good News/Bad News about Estate Law
Unfortunately, one law does not cover an entire estate plan. Remember, an estate plan is a collection of documents and rights that cover both situations when you are alive and dead. The result is that some estate planning documents will not be covered by the law discussed above. Good examples of this are your Power of Attorney for Finances and your Power of Attorney for Health Care.
The good news is that both statutes dealing with these documents have provisions that deal with divorce and the appointment to act as an agent. The bad news is that each statute operates different from Wis. Stat. §854.15, and even different from each other. A health care power of attorney nominates the principle’s spouse, then the entire health care power of attorney document becomes invalid upon divorce. See Wis. Stat. 155.40(2). If a financial power of attorney document nominates a spouse, then only the nomination of the spouse becomes revoked, but this is done as soon as paperwork to begin the divorce process is filed. See Wis. Stat. 244.10(2)(c). Note that this starts sooner and does not pertain to your former spouse’s relatives.
Reassess who you trust after a divorce.
After a divorce, you need to reassess who will:
- Inherit your assets and property
- Manage the money for your kids
- Be the best guardian for your children
- Make healthcare decisions on your behalf
- Manage your affairs if you’re incapacitated
An estate plan is based on who you trust, and divorce radically affects the people you trust, including the individuals you selected as Trustee, Durable Power of Attorney, Power of Attorney for Health Care, etc. Re-evaluating who’s on your emergency response team is critical after a divorce. You’ll be glad you did.
Shanley Law LLC has been helping Green Bay-area residents create estate plans that reflect their lives and values since 2012. Contact us today for a free Estate Planning consultation.
About Us: Attorney Devin Shanley is the approachable expert clients can trust. A native of Green Bay, Wisconsin, Devin has been developing legal solutions in his beloved hometown since 2012. Married to Mo and dad to two rambunctious kids, he has a soft spot for the Green Bay Packers, grilling out, and playing with his kids. His areas of practice are Estate Planning, Family Law, Business Law, and Non-Profit Organization Law. Schedule your free consultation by calling 920-471-4337.