Estate Planning and Divorce in Massachusetts
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So many things change when you are going through a divorce that it might feel hard to stay on top of everything, but it is important not to overlook the effect of these changes on your estate plan.
Most couples build their original estate plans around the marital relationship. When you are married with young children, you most likely have named your spouse as your primary heir. Your spouse is also likely first in line as your health care proxy and durable power of attorney. Finally, if your estate plan was designed to minimize or avoid estate tax, you most likely have "mirror" trusts that allow you and your spouse to take advantage of the unlimited spousal gift exemptions. For most people, none of this is what they want or need anymore when the marriage ends. Massachusetts law will remove your ex-spouse as a beneficiary under your will and trusts, but it will not automatically revoke all of these documents. Further, your estate plan may no longer offer you the tax benefits you had initially planned for. |
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Before Filing for Divorce
It can take many months from the time you file for divorce until the divorce is finalized. During this interim period, you are still legally married under Massachusetts law. This means any provision you have made for your spouse in your estate planning documents will not be automatically revoked until the divorce is final.
There are also limitations on what you can do after the divorce papers are filed. There is an automatic restraining order that comes into play as soon as papers are filed, which prevents both spouses from transferring assets or changing their beneficiary designations on things like life insurance policies and investment accounts.
If you are planning to file for divorce, you may want to consider making some immediate changes before you file. This includes changing your life insurance, investment account, and retirement plan beneficiaries. Your life insurance company and financial institutions should be able to provide you with the forms.
You should also consider updating your powers of attorney and health care proxies if you do not want your spouse making decisions for you before the divorce is final.
These are steps you can take without your spouse's consent. Your estate planning attorney is also bound by the attorney client relationship to keep your information confidential.
If you do not have any estate plan in place, understand that if something happens to you before the divorce is final, your soon-to-be-ex-spouse will likely inherit all of your assets.
If you already have documents in place, you will want to fully revise your estate plan after the divorce is final. It may not make sense to take this step right away, as you will not know what your full asset picture looks like until after the division of marital property in the divorce.
There are also limitations on what you can do after the divorce papers are filed. There is an automatic restraining order that comes into play as soon as papers are filed, which prevents both spouses from transferring assets or changing their beneficiary designations on things like life insurance policies and investment accounts.
If you are planning to file for divorce, you may want to consider making some immediate changes before you file. This includes changing your life insurance, investment account, and retirement plan beneficiaries. Your life insurance company and financial institutions should be able to provide you with the forms.
You should also consider updating your powers of attorney and health care proxies if you do not want your spouse making decisions for you before the divorce is final.
These are steps you can take without your spouse's consent. Your estate planning attorney is also bound by the attorney client relationship to keep your information confidential.
If you do not have any estate plan in place, understand that if something happens to you before the divorce is final, your soon-to-be-ex-spouse will likely inherit all of your assets.
If you already have documents in place, you will want to fully revise your estate plan after the divorce is final. It may not make sense to take this step right away, as you will not know what your full asset picture looks like until after the division of marital property in the divorce.
After the Divorce is Final
After the divorce is final, there are several things you will want to discuss with an estate planning lawyer.
First, if you did not update your health care proxy, power of attorney, and beneficiary designations before filing for divorce, you will need to do that now.
Second, remember that any tax planning you did in your original estate plan was likely based on your status as a married couple. Your revocable trusts will no longer protect either of you from estate taxes. If the assets you retained after the divorce (including your life insurance and retirement accounts) may exceed $1 million, you should discuss ways to avoid or minimize Massachusetts estate tax with your attorney.
Third, you will need to change your will if your spouse was named as a beneficiary. The law will revoke that part of your will automatically. That means that if you do not change your will, the laws of intestacy will determine who inherits in his or her place. This may or may not be what you want.
Generally speaking, this will be your children. If they are still minors, you may need to create a trust to hold assets for them if something happens to you before they are adults.
Fourth, you should review your will to see who you have named as a personal representative and guardian for minor children. You and your spouse may have agreed on someone for guardianship from your spouse's family, which you may want to change. In addition, if you named your spouse as a personal representative, you will need to change that as well so that it is clear who should administer your estate.
Finally, you should formally revoke any revocable trusts that named your spouse. If you had already put assets into those trusts, you can move them to another trust or to your name only. Any reference to those trusts in your will should also be removed.
First, if you did not update your health care proxy, power of attorney, and beneficiary designations before filing for divorce, you will need to do that now.
Second, remember that any tax planning you did in your original estate plan was likely based on your status as a married couple. Your revocable trusts will no longer protect either of you from estate taxes. If the assets you retained after the divorce (including your life insurance and retirement accounts) may exceed $1 million, you should discuss ways to avoid or minimize Massachusetts estate tax with your attorney.
Third, you will need to change your will if your spouse was named as a beneficiary. The law will revoke that part of your will automatically. That means that if you do not change your will, the laws of intestacy will determine who inherits in his or her place. This may or may not be what you want.
Generally speaking, this will be your children. If they are still minors, you may need to create a trust to hold assets for them if something happens to you before they are adults.
Fourth, you should review your will to see who you have named as a personal representative and guardian for minor children. You and your spouse may have agreed on someone for guardianship from your spouse's family, which you may want to change. In addition, if you named your spouse as a personal representative, you will need to change that as well so that it is clear who should administer your estate.
Finally, you should formally revoke any revocable trusts that named your spouse. If you had already put assets into those trusts, you can move them to another trust or to your name only. Any reference to those trusts in your will should also be removed.
Creating a New Will or Modifying an Existing Will
Certain changes can be made without re-doing your entire estate plan. Simply changing the name of a personal representative or beneficiary, for example, might be done with a simple codicil amending your will.
In most cases, however, a married couple's estate plan is so thoroughly designed around their marital status that it makes more sense to create a new plan reflecting your new circumstances.
In most cases, however, a married couple's estate plan is so thoroughly designed around their marital status that it makes more sense to create a new plan reflecting your new circumstances.
How Our Estate Planning Lawyers Can Help
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All of these stories are adapted from real clients who had very real shortcomings in their existing estate plans. The good news is that these are easy problems to fix. We are ready to help. We understand this can be a difficult issue to tackle, so we have designed our process to make it as easy as possible for you to get the plan in place that protects you and your family and accomplishes your goals. You can use the button below to schedule a free information call, or simply give us a call at 781-784-2322.
