Our divorcing clients have a range of estate planning needs, but some issues arise for nearly everyone whose marriage is ending. So be prepared to look into the following five estate-planning tasks.
Changing beneficiary designations. These include removing your soon-to-be ex as beneficiary of your life insurance policies, individual retirement accounts, land trusts, and annuities. Also review your transfer on death or payable on death bank or brokerage accounts, land conveyed by transfer on death deeds, and employee benefits.
Controlling access to online accounts. The Revised Uniform Fiduciary Access to Digital Assets Act, 755 ILCS 70/1 et seq., which took effect last year, provides a priority system for individuals to specifically control disclosure of digital assets and content of electronic communications on social media, email, and the like.
Many of our clients will not want their ex to have access to their e-mails, Facebook or Instagram accounts, financial or banking information, diaries, or other personal information.
Individuals can use online tools established by providers (e.g., Google’s Inactive Account Manager and Facebook’s Legacy Contact) to direct disclosure of digital assets. An online tool takes precedence over any other method of directing disclosure.” Another option is to draft a statement directing disclosure, which can be included in a client’s will, trust, or POA.
Create or revise POAs for health care and property. Most of our clients will not want their soon-to-be ex to have authority to make end-of-life decisions for them or have access to medical records. Typically, the first step for a divorcing person with a power of attorney for health care is to revise it immediately if it names the spouse as agent. And divorcing clients who don’t have a health care POA should quickly make one, because if a person has not planned for incapacity, whether short or long term, the law provides a priority list of those who can take action, beginning, of course, with the patient’s spouse.
Do you have a POA for property? It’s potentially more dangerous than the health care power. It allows access to bank, brokerage, and retirement accounts. Not only can money be withdrawn, but the named agent can obtain statements, change beneficiaries, gain access to a safe deposit box, execute a mortgage, borrow money, and much more. If you have a Property POA with your ex-spouse, you should immediately revoke it or replace your spouse with another agent.
Create or revise a will. You probably doesn’t want to leave everything to your soon-to-be ex. Assuming that’s true, we advise our clients to revise their wills to provide for their children, parents, siblings, charities – any people or organizations they genuinely want to provide for in the event of their death.
Even so, the spouse can renounce the will and elect to take a third of the decedent’s estate if the client dies before the divorce is final, but the spouse has to make that election. You’re still better off with a will than without one unless you opt for a revocable trust as described below. Without a will, the laws of intestacy provide that if the decedent has no children, the spouse will receive 100 percent of the estate (50 percent if there are kids) compared to a third for renouncing.
You should also name someone other than your spouse as executor and name a guardian and successor guardian that you feel comfortable having custody of his or her children.
Create or revise a revocable trust. With a revocable trust, a divorcing person can bypass both probate and the forced share. A spouse cannot renounce a trust, so a spouse not named as a beneficiary cannot elect to renounce and receive a third of the assets – the spouse receives nothing.
This only works, however, if the trust is funded during the client’s lifetime. The assets must be titled in the name of the trust, rather than the client’s name individually. If a trust exists but is not funded, the assets are administered according to the client’s will or according to the laws of intestacy if no will exists.
These steps can be complicated and difficult to do on your own, so if you’re going through (or considering) a divorce, give us a call at 847-854-7700 or contact us using the following form for a free consultation.