I Just Got Divorced, Now What?

If you’ve just made it through the emotional (and logistical) roller coaster known as Divorce, you’re not alone! Even in a best-case situation where both spouses treat each other amicably, you’re looking at lots of major life changes all at once.

Most divorce judgments focus on property division and parenting arrangements, overlooking Estate Planning—but one powerful way to support your new life and new future is to ensure that your documents are updated and reflect your wishes. Even if you never created a Will or other documents with your Ex, this transition is an excellent time to get started! Here are some basic facts about these documents and what you should do next.

Your Will (Last Will and Testament):

The facts: In some states, including Illinois, divorce automatically revokes any provisions in your Will that benefit your former spouse. This means that they would neither receive any money from you after you died, nor would they be able to act as the Executor of your Will. However, this isn’t a universal rule, and you shouldn’t rely on it to achieve your goals. Plus, it’s important to note that even if that automatic revocation applies, it ONLY applies to your former spouse—if you named any of your in-laws in your Will, either to inherit money, act as Executor, or act as Legal Guardian of your minor children, those provisions would remain valid.

What to do: Your best course of action is to revoke your previous Will and create a new one. If you never had a Will before, now is a perfect time to create one. In your Will, you’ll choose who will receive what you own after your death, designate an Executor who will carry out your wishes, and if you’ve got kids under age 18, designate a Legal Guardian for them until they’re no longer minors.

Your Financial Power of Attorney:

The facts: This document gives another person (your “Agent”) the authority to manage your finances if you become incapacitated.

What to do: If you appointed your spouse as your Agent on any Financial Power of Attorney, you should create a new Financial Power of Attorney document, which revokes any previous one you may have had, and provide a copy of it to all of your financial institutions. It’s always a good idea to sign new forms, with current dates, to show that you updated things after your divorce.

Your Healthcare Power of Attorney:

The facts: Similar to the Financial Power of Attorney, this designates an Agent of your choice to make medical decisions for you if you are unable to do so.

What to do: For the same reasons as your Financial Power of Attorney document, you should create a new Power of Attorney for Healthcare, and provide a copy to your healthcare providers.

Your Trust:

The impact of divorce on a Trust depends greatly on what type of Trust you have:

A Revocable Trust may receive the same automatic revocation as a Will, but all of the same exceptions would also apply. Best practice is to officially revoke the Trust and create a new one that reflects your wishes.

An Irrevocable Trust is more complex. They are generally unchangeable once created and may require a judge’s approval to make any modifications after divorce. If you have an Irrevocable Trust with your former spouse, consulting with an Estate Planning attorney is crucial.

Beneficiary Designations:

The facts: One very important (and often overlooked) part of post-divorce estate planning involves assets that already have their own named beneficiary or beneficiaries. These include life insurance policies, annuities, retirement accounts (like 401(k)s and IRAs) and Pay-On-Death (POD) or Transfer-On-Death (TOD) accounts.

What to do: As soon as your divorce is final, contact each financial institution or insurance company to get any forms required to update your beneficiary designations. It’s also true that some divorce agreements (those where child support or spousal maintenance will be paid) require one spouse to maintain a life insurance policy naming the other as a beneficiary until their support obligation has expired.

Other things to consider:

If your parents or other family members have their own estate plan and it includes your former spouse, they should review their plan as well. Their documents may also need to be updated to keep assets out of your ex’s reach.

Sometimes, divorced couples remain amicable and continue to name each other in a position of trust in their estate planning documents. Nothing prevents you from leaving a gift to your former spouse in your Will or Trust, or from designating them as your Executor or Agent.

Divorce can be stressful and complicated, but knowing the facts and taking the correct actions can leave you in the best possible position to begin your new life. Contact our Erwin Law attorneys to get started!