How Divorce Will Affect Your Estate Plan
When going through a divorce, it may feel like your life is completely changing. Many things may feel uncertain, and the amount of time and attention you have to spend on paperwork and details may leave you feeling overwhelmed.
You may be tempted to make drastic changes during a divorce proceeding, particularly to things that would otherwise result in your spouse benefiting financially. However, some things should be adjusted only after careful consideration of the law or with the counsel of an attorney. On the other hand, some things change immediately upon the commencement of a divorce proceeding.
Changes That Happen Automatically
The Bench and Bar of Minnesota has published useful information about changes to estate planning tools that automatically take place upon the commencement of a divorce proceeding. For example, a power of attorney and health care directive in favor of a spouse are automatically revoked.
When commencing divorce proceedings in Minnesota, by statute, language in the “summons,” which is the initial order to begin the divorce, requires that the parties to the divorce abide by certain restrictions applicable to estate planning changes.
Changing Your Life Insurance Beneficiary
It is common for a spouse to be listed as the primary beneficiary on life insurance policies. If you are in the process of filing for divorce, you will likely want to change the beneficiary designation so that the proceeds will benefit your children or someone else. However, you should consult with an attorney before making a change like this. Language in the summons restricts this type of change, so a person who decides to make a change could be subject to negative consequences.
Sometimes, spousal maintenance, child support payments or property settlements as a part of a separation agreement or divorce are negotiated in a way that life insurance is put in place to ensure that the payments continue for a certain period of time, extending after the person passes. Additionally, according to In re Estate of Heinz, a case from the Minnesota Court of Appeals, there could be negative consequences for a party to a divorce who lets a life insurance policy lapse or who “encumbers” the policy by borrowing against it or taking out a loan against it.
Changing Your Will
While certain actions are barred while a divorce proceeding is pending, others are not. There is no restriction in Minnesota against executing a new will while you are in the process of divorcing your spouse. In fact, it is important to update your will to adequately represent how you choose to divide your assets upon death.
If you are considering a divorce, it is important to seek the assistance of an experienced attorney to guide you through the process. An attorney can help prevent you from making any decisions or changes that could violate a court order or otherwise negatively influence your case. An attorney can also help show you what changes are appropriate, encouraged or even necessary to attain your goals in the process.
To learn more, reach out to our firm. You can call us at 651-319-5180 or reach us online.