When you’re in the process of divorce, revising your current estate plan is not usually foremost in your mind. You’re more likely to be concerned about how marital property will be divided, who will have primary physical custody of the kids, and how the divorce will affect your finances. However, it is also a perfect time to review your Will and powers of attorney, or set them up if you have not already done so.
Wills
If you designated your spouse as a beneficiary of your Will while married, Texas law states that their inheritance will be automatically voided upon divorce, with their share being distributed among your other beneficiaries. This doesn’t mean you should change your Will only when you get around to it. If you pass away before the divorce is finalized, your Will is likely to be probated and your spouse can still inherit. Therefore, you should make the necessary changes once you know that divorce is going to happen. Also, a Will is even more important if you have minor children so that you designate who you want to take care of your money on their behalf.
Trusts
Unlike Wills, there is no Texas law that automatically removes your former spouse as a trustee or beneficiary of a Trust. If your estate plan includes a Revocable Trust, you should consult with a Texas estate planning attorney for advice on how you can remove your former spouse from the Trust and appoint a new trustee.
Powers of Attorney
Powers of Attorney are similar to Wills in that Texas law voids your spouse’s role once the divorce has been finalized. But if you become incapacitated due to illness or injury before the divorce goes through, your spouse retains their appointed role and can make decisions on your behalf. You should immediately revoke their role as agent and authorize someone else to act on your behalf. Additionally, since you will no longer have a spouse to handle any financial or medical decisions if you are incapacitated, it is even more important to have these documents in place. If you become incapacitated and do not have Durable Power of Attorney and Medical Power of Attorney, your family will have to apply for a guardianship in order to take care of your financial and medical needs, which is a costly and involved solution.
Retirement Plans and Life Insurance
Texas law dictates that, after your divorce, your spouse will no longer be treated as a beneficiary on your retirement plans and life insurance, allowing the proceeds to go to any contingent beneficiaries you have named. However, following a divorce is a good time to verify and update all beneficiary designations. This is also a good time to organize the information so that it can be easily located.
Preparing for divorce requires you to consider your current estate plan in addition to asset inventories and financial accounts. There will no longer be another adult in your household with knowledge of your assets and financial information. Failure to update your estate plan can result in an unintended and detrimental outcome, so make arrangements to meet with a Texas estate planning attorney as soon as possible.
Contact Us
If you require assistance with this pre- or post-divorce planning, contact the estate planning team at Fraser, Wilson & Bryan, P.C. In addition to guiding you through the legalities of a Texas divorce, we will review your estate plan and help you update it so that it reflects your changed circumstances. This way, you can face the future knowing that if the unexpected happens, your estate will be handled exactly as you wish.
