Without question, divorce is difficult, even in the best of circumstances. Taking two lives that have become intertwined with one another and separating them is never easy. Certainly, there is emotional stress involved, and in many cases, financial stress can be involved as well. While a certain amount of emotional and financial stress is unavoidable, there are certain steps you can take to plan ahead and relieve at least some of that stress. One area that requires significant planning, yet which may often be overlooked in the stress of more immediate concerns, is estate planning. It is important, however, to focus on your estate plans and to reassess them as necessary in light of your divorce.
It should be noted that in Iowa, legislators have actually recognized the fact that most people who go through divorces may fail to properly update their estate plans. As a result, the legislature has implemented a number of provisions throughout the Iowa Code that essentially state that any provisions in your legal document which provide for your ex-spouse are ignored. These sections include:
- Iowa Code section 598.20A provides that if you list your ex-spouse (or relatives of your ex-spouse) as your beneficiary of life insurance, that designation is ignored.
- Iowa Code section 598.20B provides that if you list any of the same individuals as beneficiaries of your IRA, annuity, stock option plan, POD (Payable on Death) account, or TOD (Transfer on Death) registration, your beneficiary will be ignored.
- Iowa Code section 633.271 provides that any provisions in your will, whether naming your ex-spouse as a beneficiary, or appointing your ex-spouse to a fiduciary position (executor or trustee for example) are negated.
- Iowa Code section 633B.10 provides that if you named your now ex-spouse as your agent under your financial power of attorney, that power terminates when the petition for dissolution is filed.
- Iowa Code section 144B.12 provides that, after a divorce, if your medical power of attorney lists your now ex-spouse, that authority is revoked.
While these provisions are reassuring, it can nevertheless be helpful and wise to update your legal documents regardless. Doing so serves to truly eliminate any confusion as to your intentions. While everyone’s circumstances are unique, there are certain helpful steps you can take to help ensure that you are adequately prepared for the effects of divorce:
- Update Your Health Care Directives: Life is full of the unexpected, and you never know what each day might bring. Unfortunately, tragic, life-changing events can happen quite quickly. If an accident occurs and you find yourself incapacitated or in the ICU, you want to be certain that you are clear about your wishes as far as who will make health care decisions on your behalf. Many people actually get divorced and forget to update these documents – and still have their ex-spouse listed as their health care proxy, even after the marriage has ended.
- Change Your Power of Attorney: At some point, you and your spouse may have executed power of attorney documents. If the document was a durable power of attorney, it gave your spouse access to all of your accounts and assets, even now while you are fully competent. If this is the case, or if you suspect that it was the case, it would be a wise decision to contact the attorney who helped you to draft those documents. After the divorce, you will want to revoke the power of attorney and execute a new one. Advising your ex-spouse of the revocation is also wise and can be done through your attorney as well.
- Update Your Will: If your will lists your ex-spouse as the person who will be in charge of administering your estate, it would be wise to update the will to reflect your current intentions. While you will not be able to prevent your spouse from being named guardian of the children of your marriage (unless the spouse is legally proven to be unfit), you can make other important changes to better align with your current life circumstances.
- Consider Amending Your Trust: If you have a revocable trust, you may want to consider what assets you wish to leave to your spouse. If, for example, the trust provides for gifts to your spouse’s extended family, you may want to alter those provisions. You may also want to consider any trust provisions naming the trustee who will control the funds in the event of your death. If it is your spouse, you may want to change that designation in the event of a divorce. A qualified estate-planning attorney will be able to advise you of sound choices to make to give effect to your intentions and wishes, and it is always wise to consult with counsel when making changes of this nature.
- Updating Beneficiary Designations: Certainly, if you have been married for some period of time, your spouse will be legally entitled to a portion of your 401(k) and/or pension upon divorce. While you may not be able to change this fact (or to change the beneficiary designation on your life insurance or 401(k) during the divorce itself), after the divorce, you will want to update the beneficiary of any funds received or policies created going forward.
- Review your prenuptial agreement: If you and your spouse entered into a prenuptial agreement, prior to getting married, it is important to review that document with your divorce attorney. If that document contains any provisions about what your spouse may be entitled to in the future or in the event of your death, you will want to ensure that your new estate plan is consistent with the terms of that agreement to avoid any legal headaches in the future.
Contact 303 Legal, P.C. Today
While divorce is never easy, it can be made easier. In large part, making it easier depends upon effective planning, and a significant component of effective planning is retaining knowledgeable and experienced legal counsel who can advise you as to the best steps to take to protect your rights, both during the divorce process and after. At 303 Legal, P.C., we specialize in doing exactly that and would welcome the opportunity to talk with you about your particular circumstances and how we might be able to help. Contact us today.