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Divorces are stressful and expensive situations for everyone involved. However, they can be a lot worse if one spouse dies before the divorce is finalized. Whether you are the recipient of a divorce petition or the sender, one of the first people you should call (after your divorce attorney) is your estate planning attorney*. The following are five of the top estate planning steps you need to consider.
Who will inherit your estate? Your Will (or revocable trust) will dictate how and where most of your assets will be distributed. If you don’t have a Will, these documents, then your assets will pass through intestacy: some combination of your spouse and your descendants. Non-probate assets, i.e. joint accounts, life insurance policies, retirement plans, are often controlled by contracts entered into when the asset was acquired.
If you do not want your spouse to inherit your assets, then you need a Will and should revisit the beneficiary designations of your non-probate assets**. However, some states do not let you entirely disinherit a spouse (even a divorcing one) by granting your spouse the right to receive a portion of your assets. This is commonly known an elective share and is typically an amount equal to one-third of your assets. In Florida, spouses have other rights, such as the right to receive the homestead, the right to family automobiles and household furnishings, and an additional $18,000 for support.
Some states allow you to limit your spouse’s access to their elective share through an Elective Share Trust. These trusts limit the spouse’s inheritance by only leaving them an income interest in the assets comprising the elective share. Elective Share Trusts are particularly important if you and your spouse have children from different relationships and you want to ensure your children are the ultimate beneficiaries of your assets.
2. Personal Representatives and Trustees
Who will control your assets after your death? In your Will (and trusts), you appoint one or more people to manage your estate. If you have minor children or if you leave assets in trusts for your heirs, these documents would also appoint trustees. Although your spouse does not have a right to serve as personal representative of your estate or as trustee of any of your trusts, it is important that you consider who you want controlling your assets right after your death and for your beneficiaries in the long term.
3. Durable Power of Attorney and Revocable Trusts
Who will make financial decisions if you cannot? Equally important to deciding who controls your assets after you die, is deciding who controls them while you are alive but unable to manage your affairs. Most people make these decisions either through a durable power of attorney, revocable trust, or both. If you have these documents, they may need to be updated to grant authority to someone other than your spouse authority to act on your behalf.
4. Health Care Decisions
Who will make decisions about your health care if you cannot? Absent express written direction to the contrary, Florida law generally grants your spouse with the authority to make health care and end of life decisions for you. Therefore, you should consider who you want making decisions concerning your health care and have a Designation of Health Care Surrogate in which you would appoint primary and alternate surrogates. Additionally, if you do not want your life prolonged by artificial means, then you need a Living Will.
5. Burial Arrangements
Who will make decisions about your funeral and disposition of your body? In Florida, a person retains the right to make these decisions so long as they’ve done so in writing. If no such writing exists, then your spouse makes these decisions. Accordingly, you should adopt written burial instructions so that your wishes can be followed.
* If you and your spouse previously used the same estate planning attorney, that attorney may be ethically prohibited from representing one or both divorcing spouses. In that case, you should seek a new attorney to represent you alone.
** Federal law prevents you from disinheriting a spouse from retirement accounts governed by ERISA.
About the Author:
Brad Gould practices in Dean Mead’s Fort Pierce office located in St. Lucie County, Florida. His practice covers the areas of federal income, estate, and gift tax law and business succession planning. He represents businesses and business owners in all types of business and tax matters, including choice of entity, mergers and acquisitions, reorganizations, and other general business matters. Mr. Gould represents individuals, businesses and fiduciaries before the IRS and also counsels clients on estate and wealth preservation planning matters. Additionally, he represents trustees, personal representatives and family members in controversies regarding wills, trusts and estates. Mr. Gould is a Certified Public Accountant. He may be reached at email@example.com.