Updating Your Estate Plan after a Divorce
There are countless ways that your life may change after a divorce. Aside from no longer being married, you’ll likely need to move to a new home and may be spending a substantial part of each week or month away from your children. Along with each of these changes comes a legal component that you’ll need to consider, aside from the emotional and logistical implications.
In the flurry of financial and legal issues that arise from a divorce, many divorcées neglect one of the most important legal instruments to their name: their estate plan. Read on to learn about the ways that a divorce can affect the gifts you leave to your heirs, and contact experienced Illinois estate plan and family law attorneys with any additional questions.
Changes to your will occur automatically, but not right away
Certain changes occur automatically upon divorce. For example, if your spouse was designated as the recipient of the majority of your estate, those gifts will be revoked. However, this revocation doesn’t occur until your divorce is final—a process which can, in some cases, take a year or more. Should you pass away unexpectedly while your divorce is ongoing, the probate court will not assume that you did not want to designate your spouse as a beneficiary simply because you were seeking a divorce. Even if your divorce was final at the time of your passing, the gifts left to your former spouse will then pass as though you did not have a will at all, and they could end up going to recipients you would not have otherwise chosen.
I once dealt with a case where husband died in a car accident before the divorce was finalized. The day after he passed away his wife showed up at the family business with her divorce attorneys. She and her attorneys subsequently prevented our client’s children from working at the business. Our client’s children were born from a prior marriage. They eventually got the business back, but only after going to Court.
Beneficiary designations require your input
Unlike the contents of your will or trust, many beneficiary designations will require you to make a direct change. If, for example, your spouse was listed as the beneficiary of your retirement account or life insurance policy, that designation would survive a divorce.
I once dealt with a family where their father had been divorced over thirty years. He had worked at a large company during his whole life and had a 401(k) with over $1 million dollars. The company informed the family that the ex-wife was the primary beneficiary, and that the father had not updated his beneficiary designation. The family argued that the father had updated the beneficiary online, and that he was divorced from the ex-wife for over thirty years. The company went to Court and argued that the 401(k) was governed by federal law, and that the Illinois divorce judgment did not apply since it was a state court judgment that had no legal effect on federal law. Again, the family worked out a settlement, but it was still a messy situation that could have been avoided.
For this reason, it is important to work through your estate plan with a skilled attorney when you file for divorce, so that you can prevent such easily-avoidable mistakes.
Contact the estate planning attorneys at Pluymert, MacDonald, Hargrove & Lee for a consultation at 847-310-0025, with additional offices conveniently located in Des Plaines at 847-298-5030.