By Kenneth A. Vercammen, Esq. Author ABA’s “Wills & Estate Administration” book
If separated and suddenly die, your spouse will still receive either all of a minimum of 50% of your probate assets if no valid Will. Don’t rely on a cheap online document. Have your Will done by a estate planning attorney. Don’t try to do your own electrical work. Don’t try to do your own legal work.
In planning, make sure your assets go to your loved ones or favorite charity, not an "ex". Therefore, we advise our separated or divorced clients to do the following:
1) Have an Estate Planning Law attorney prepare a Will to distribute your assets to the people you care about the most. If you already have a Will, prepare a new Will and have the old Will revoked. (Your estate planning attorney will explain this to you.) Usually a new executor is selected, who will also serve as funeral agent.
Although in many states under law a divorce removes the ex spouse as a beneficiary, it does not remove the ex as executor or receiving assets under a bank POD or joint account. Don’t ever use with a cheap online form that often is not filled out correctly. Self prepared documents are often not witnessed right and are not admitted to probate. Have an experienced attorney prepare the estate planning documents who will do it right. I could change my car oil and repair the lawnmower, but I now prefer an experienced mechanic do that. You can also create specific bequests so nice jewelry or family heirlooms go to a selected child. Otherwise the executor can just sell them at the pawn shop. You can also direct in your Will a child be excluded from inheriting. Example- they testified against you in divorce court.
2) Prepare a Power of Attorney to select someone to handle your finances if you become disabled. Have your old Power of Attorney revoked. This means your attorney or you should send notices to banks and your accounts to indicate the prior Power of Attorney is invalid. If you have children over age 18, have your attorney prepare a Power of Attorney for the over 18 children so the custodial parent can still have access to their records and pay their bills if they are in an accident.
3) Select a new beneficiary on assets you may own, such as stocks, transfer upon death brokerage accounts, bank accounts, IRA, retirement accounts, 401k, payable upon death accounts POD , and other financial assets. Make sure you see the actual change in beneficiary in writing. Don’t rely on a phone call from the company that accounts are revised. Even if a court approved divorce decree states that a beneficiary should be changed, make sure you have changed the beneficiary designations. Remember, even a new Will does not change account beneficiaries on non-probate assets.
Change passwords on all online accounts and notify them in writing that the former spouse is not permitted excess to records.
4) Change your beneficiary under your own life insurance, whether whole life insurance or term insurance. Again, don’t just rely on language in a divorce decree to make sure your wishes are followed. If the ex-spouse is required to obtain life insurance to pay to you or your children, you want to see proof of the insurance in writing with beneficiary designation.
5) Contact your employer's human resources and change the beneficiary on pension, stock options, life insurance, and other employee benefits. Note that if you are not yet divorced, your spouse may have to sign a written waiver permitting you to change beneficiaries.
6) Keep your personal papers at a location where an ex-spouse or the child's parent can't steal or destroy them.
7) If you have minor children, nominate someone under a Will to serve as guardian to the children. Although the surviving parent obviously has first right of custody of children, they may not even want custody. You don’t want your ex in-laws to have custody of your children or access to the children’s money. A new Will specifically shows a Surrogate and Probate Judge you’re your wishes are. If no Will, then a judge can only guess.
Also set up a Trust in the Will so children and grandchildren receive funds when they are 21, 25 and 30. Preserve money for college and necessary expenses, not a windfall to buy an expensive car when they turn 18. Also don’t make the minor children beneficiary of big life insurance policies, because they automatically receive when they turn 18. Instead, you can make your estate the beneficiary of life insurance and other accounts. How many 18 year old kids would spend money wisely? Seek assistance of estate planning attorney, don’t try to do everything yourself.
A trust also protects the beneficiary if there is a lawsuit and judgment against them.
8) Make sure the trustee for any funds designated for your children is the "right" trustee. The former in laws may no longer be the best choice.
9) Re-title real estate, cars and other assets in joint names. Usually a new Deed will have to be prepared. If there is a mortgage, either a refinance or consent of mortgage company to remove your name from the mortgage. [Good luck with that.]
10) In New Jersey, if you are still married and living with a spouse, under certain instances the surviving spouse has a right to "elect against the Will". The disinherited spouse may try to elect against the Will and try to obtain one third of the estate. Your attorney can explain how you can protect yourself and your children.
11) Have a new Living Will / Advance Directive for health care/ medical proxy prepared to remove the ex and select a family member you trust with last medical wishes. The Living Will should contain new HIPPA language to advise doctors and hospital who should have access to medical information. You don’t want an estranged person to be able to make Medical decisions or “Pull the plug”. A divorce decree does not remove the ex-spouse on Medical Power of Attorney/ Living Will. They should have a new Living Will prepared.
Separated persons
Some clients are not aware they can have a new Will and other estate planning documents prepared prior to a formal divorce decree. To the contrary, our office drafts Will for individuals in marital difficulty who want to protect their assets and children in the event of an unexpected, sudden death. A personal can have a new Will and estate planning documents without telling their spouse.
If spouses are living together, the surviving spouse in many states can Elect against the Will and obtain 1/3 of the augmented estate. See Uniform Probate Code 2-201. A married person can also confidentially revoke a Power of Attorney, Living Will, Trust etc. However, the original attorney cannot prepare new documents if the attorney also prepared documents for the other spouse. The original attorney in some states may be required to notify the other spouse. Therefore, a new, independent attorney is suggested whose only loyalty is to you.
It is important to prepare new documents if separation has started or is inevitable since someone does not want their some of be ex to make financial and medical decisions. However, typically a spouse cannot be removed as a beneficiary under pensions, etc without that spouse’s written consent.
You can select a funeral agent so your estranged spouse does not handle funeral arrangements.
Also speak with your divorce attorney to inquire if you can take out 50% of assets in a joint account and deposit in a new account payable death to adult children, not the estranged spouse.
If you own a small business, prepare a contingency plan if you become disabled for someone to run your business.
Second marriage
If you decide to get remarried, have your attorney prepare a prenuptial agreement, so your children can inherit your assets. You want your children, not new spouse, to receive your assets if you pass away. In many states, persons put their assets into Trusts for the benefit of a child. However, if the trust is revocable, Medicaid will include the trust assets as available money. In blended families, irrevocable trusts are useful because a Will can be revocable by a competent person without telling their spouse.
If You Have No Will after someone divorces:
If you leave no Will or your Will is declared invalid because it was improperly prepared or is not admissible to probate:
1. The procedure to distribute assets becomes more complicated. It will require all of the children to select someone to be the Administrator, then all the children to sign a Renunciation Affidavit in front of a notary. If all the children do not sign the Renunciation Affidavit if front of notaries, then a Complaint and Order with have to be filed in the Superior Court. Cost over $3,000. The preparation of a Will for under $400 eliminates these costs.
2. Additional expenses will be incurred and extra work will be required to qualify an administrator-Surety Bond, additional costs often over $1,000 and extra legal fees
3. State law determines who gets assets, not you. People who dislike you or don’t care about you can get your assets
4. If you have no spouse or close relatives the State may take your property. Most people who rather have charities or friends get their money.
5. It often causes fights and stress within your family and sometimes lawsuits
6. If there are minor children a Judge determines who gets custody of grand children
7. You lose the opportunity to reduce State inheritance taxes and Federal estate taxes without improper planning
When loved ones are grieving and dealing with death, they shouldn’t be overwhelmed with Financial concerns and estate problems if there is no Will or not prepared or signed properly.
Who don’t you want to receive your assets?
Who is not the best choice to raise your children, or safeguard your children's money for college? Do you want children, or grandchildren, to get money when they turn 18? Will they invest money wisely, or go to Seaside and play games?
ESTATE PLANNING TO PROTECT CHILDREN
There may come a time when an unmarried parent is unable, due to physical or mental incapacity, to take care of their minor children. If a parent dies, the minor children will need a guardian. In these circumstances, those caring for the children, as well as the courts will need direction. By writing and executing a Will, which includes instructions on guardianship one may select someone, either individually or jointly, with the legal authority to act for minor children and assume control over the assets of the children. Estate planning, which includes the execution of a Will, is just as important for persons with minor children as they are for senior citizens.
Guardians
Most individuals appoint the parent to act as Guardian of the person and property of their minor children. It is suggested that your Will include a clause which provides that in the event the other parent predeceases you, or is unsuitable or ceases to act as Guardian of the person and property of your minor children, you appoint a trusted family member or close friend to act as successor Guardian of the person and property of your minor children.
Sometimes the divorce is amicable and the person may still wish to have their ex –spouse be executor of their Will or Trustee of a trust for children. New estate planning documents should still be signed after the divorce to confirm they want to ex to remain involved in a potential estate.
Trustee for funds
Select a trusted person, your close relative or friends, who will invest and hold your children's money. If divorced or unmarried, most people do not select the other parent. In your Will and Trust you can instruct the Trustee to apply amounts of income and principal as they, in their sole discretion, deem proper for the health, maintenance, education, welfare, or support of your children or other minors. Direct that the trustee shall accumulate any income not needed for the above purposes, paying and transferring the portion held in trust to the beneficiary upon his or her attaining the age of majority or whichever age you select.
If you do not write a Will, the government has already written one for you. Your assets go to whoever a state law says receives the assets, or to the government itself!
As average Americans, we work 80,000 hours in a lifetime, or 45 to 55 years. In the havoc after a break up, many persons forget to have a Will done to assure assets and decisions are taken out of the hands or the ex spouse and ex spouse’s family.
In spite of all our resources and the assets we earn during our lifetime, the vast majority of Americans do not take the time to create the legal instructions to guide the court or a guardian upon their death. National statistics indicate that more than 50% of Americans foolishly die without leaving a Will. In the absence of a Will or other legal arrangement to distribute property at death, the problems often arise and a Judges decides who gets custody of your children and handles your money. This process is called the law of intestacy. The result can be lengthy delays in the distribution of your estate, court battles between relatives and your children being raised by someone you do not favor. Without a Will, your family will have to pay substantial costs for accountants, attorneys, bonding companies and probate fees.
Conclusion
While the preceding article contains possible items to be discussed with your family, attorney and executor, the article is by no means exhaustive. A number of these items may not be applicable in your situation, and probably there are many others that are applicable. The essential element is to spend some time now considering what you should tell those most closely associated with you to facilitate their handling of your affairs upon your death.
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