If you are like most people, you probably realize the importance of creating an estate plan—just in case something unexpected should happen. The specific components of your estate plan will depend on the types of assets you own, how much you own, and other factors, but your plan could include a will, different kinds of trusts, a living will, powers of attorney, and more. Sometimes, the “something unexpected” will be a divorce, which can substantially affect the estate plan you have in place. If you are facing the end of your marriage, it is important to review and update almost every element of your plan.
Your Will
For many people, a last will and testament provides the basis of their estate plan. Your will gives you the ability to formalize your wishes about how your assets will be distributed, who will care for your minor children, and other important considerations. In your will, you can also appoint an executor to manage your estate leading up to and during the process of probate.
According to the Illinois Probate Act, if you get divorced after signing and executing a valid will, the will remains valid. However, any provisions of your will pertaining to your former spouse are revoked automatically. This includes any inheritances, nominations, and appointments to serve in a fiduciary capacity. Specifically, the situation will be treated as if your spouse died on the date that your divorce was finalized.
Changing Your Will
After your divorce is complete, you will probably need to update any provisions in your will that mentioned your former partner. You may, in fact, want to make such updates before your divorce is finalized. In the unlikely event that you were to die before the judgment of divorce is entered by the court, the original terms of your will—including those that address your spouse—will remain in effect.
Remember that you might want to make another set of updates after your divorce is complete. Depending on how your marital property is divided, you may be in a dramatically different financial situation than you were in before, and your will should reflect your new reality. You may even need to start from scratch if your situation changes that much.
You should also keep in mind that a divorce will only revoke the provisions that specifically pertain to your ex-spouse. While this might seem obvious, your will might also have named your stepchildren or in-laws as heirs or fiduciaries. These terms are not automatically revoked by your divorce, so you will need to make the necessary updates on your own.
Can I Keep My Ex in My Will?
Depending on your circumstances, you might have very good reasons to keep your former partner in your will. For example, your ex probably knows you better than almost anyone, and you may trust him or her to serve as the executor of your estate. You might also want to leave certain assets to him or her despite your divorce. If you want to keep your ex in your will, you will actually need to draft and sign an entirely new will after the divorce is finalized. Drafting a new will also reduces possible confusion about your desires, making it less likely that someone could successfully challenge your will.
Revocable Trusts
As with a will, a divorce will revoke many of the provisions that pertain to your ex-spouse in any trusts you have established. However, there are important differences due to the rules that apply to certain types of trusts.
In the realm of estate planning, revocable living trusts are among the most common kinds of trusts. Also known as an “inter-vivos trust” or a “grantor trust,” a living trust will generally go into effect while the creator is still alive, and it is used to hold assets that are to be disbursed to the named beneficiaries at a later time—usually upon the death of the creator. The “revocable” part of a revocable living trust means that the terms of the trust can be updated or revoked while the creator is still living.
Under the Illinois Trusts and Dissolutions of Marriage Act, a divorce judgment “revokes every provision that is revocable by the settlor [creator of the trust] pertaining to the settlor’s former spouse.” In practice, this means that if you appointed your spouse to serve as your successor trustee or named him or her as a beneficiary, those terms will be voided by your divorce. It is possible, however, to set up a living trust to keep such provisions in effect after your divorce, but the terms of the trust agreement must specify such an arrangement.
Irrevocable Trusts
While less common than revocable trusts, some estate plans include irrevocable trusts, often for the tax advantages they offer. Examples of irrevocable trusts include charitable remainder trusts, generation-skipping trusts, and credit-shelter trusts. As the name suggests, an irrevocable trust cannot be changed or revoked once it takes effect. Therefore, your divorce will not affect the provisions of an irrevocable trust.
You can, however, plan for the possibility of a divorce while you are creating your irrevocable trust. For example, the trust agreement could state that a divorce will result in your spouse being removed as a trustee or named beneficiary.
Powers of Attorney
A power of attorney is a legal arrangement through which an individual—the “principal”—gives another person—the “agent”—the authority to make decisions on behalf of the principal. Powers of attorney can be used in many different capacities, but for the purposes of estate planning, there are two primary types. The first is a power of attorney for property, which allows the agent to make decisions about the principal’s money, property, and debts. The second type, called a power of attorney for healthcare, lets the agent make decisions regarding the principal’s medical care and health-related concerns.
In estate planning, the most common reason to use a power of attorney is as a form of insurance against unexpectedly becoming incapacitated. For example, if you were to suddenly suffer an injury or illness that left you unable to manage your own money, a power of attorney for property would give another person the ability to manage your finances for you. As you might expect, it is common for a person to name his or her spouse as the agent using a power of attorney.
What Does the Law Say?
As with both wills and trusts, a divorce judgment automatically invalidates all provisions regarding the principal’s ex-spouse in a power of attorney document. If you chose your spouse to be your agent, his or her decision-making authority would be voided once your divorce is completed. A judgment of legal separation will invalidate these terms of a power of attorney as well.
Just as with a will, the law treats the situation as if your spouse died when the judgment was entered. The law also only pertains specifically to your spouse. If your brother-in-law, for example, is named as your agent, he will remain in that role after your divorce unless you take additional action.
Again, you need to remember that nothing happens automatically to your power of attorney until your divorce is finalized. While the proceedings are pending, your existing power of attorney is still in effect. This means that if you become incapacitated before your divorce is finalized, your named agent will have the power to make decisions on your behalf—even if the named agent is your soon-to-be ex. With this in mind, it may be best to select a new agent or to pursue a legal separation if you think your divorce will take a significant amount of time to complete.
Contact a Skilled Estate Planning Attorney
A divorce is likely to change nearly every aspect of your life, including your estate plan. For help with amending your will, trust, or powers of attorney during or after your divorce, contact an experienced Downers Grove estate planning lawyer. Our team will provide the guidance you need to reorganize your life following the end of your marriage.