Divorce’s Effects on Estate Plans
Dustin A. Duke and Jon Cigainero
If you are recently divorced then chances are, with all the other changes and turmoil in your life, one of the last things you are thinking about is your estate plan. A lot of people don’t think about estate planning in general, let alone after a divorce. However, changes to your final wishes may be something to consider after major life changes.
Arkansas Law May Have Changed Your Estate Plan for You
There is some good news if your estate plan consists of a Will and your property is all in your name (not in jointly held accounts with your ex-spouse). Under Arkansas law, after you divorce your ex-spouse is automatically cut out of any Will that was created by you before the divorce. Any property that you left your ex-spouse in your Will will go to the next person(s) in line to take under the terms of the Will.
Your Will Isn’t the Only Thing to Consider
If you do leave your ex-spouse as a joint account holder on a bank account, brokerage account, or retirement account, chances are, depending on how the account is set up, that any funds in that account will go to your ex-spouse if you die first regardless of what your Will says and regardless of your wishes. This is also true if you left your ex-spouse as a beneficiary on a life insurance policy, or left him or her as a pay on death (POD) or transfer on death (TOD) designee on a bank account or brokerage account. Your ex will get the funds in those accounts instead of the persons who you really want to receive them (such as a new spouse or children).
You should also make sure that all real estate is addressed in your divorce decree and that any award of real estate is carried out by the necessary transfer of deeds. Too often is real estate awarded to one spouse or the other in a divorce only to have the parties (or their attorneys) forget to transfer title by signing over deeds. This can create problems and extra expenses for you or loved ones down the road when you and/or your ex-spouse die.
Another document to consider updating is your power of attorney, whether it be for healthcare or financial. Although Arkansas law does invalidate an ex-spouse from acting as agent under a power of attorney that was created before a divorce (unless the power of attorney specifically states otherwise), it is still a good idea to make sure that you have someone that you trust and can rely on listed as an agent in your power of attorney. It is also probably a good idea to destroy any old powers of attorney that list your ex as your agent and let your healthcare providers and financial institutions know that your old documents are no longer valid.
Finally, if you divorce you may need to rewrite or amend any trusts that you have. A trust, even more so than a Will or Powers of Attorney, may be complicated to change or rewrite, therefore it is advisable to talk to an attorney before attempting any changes on your own.
If you have recently divorced, now is the time to check your estate plan and make sure that your ex-wife or ex-husband is removed from all estate planning documents and that your Will, trust, advanced directives and/or beneficiary and POD/TOD designations are up to date.
Call ARlaw Partners today to set up a free consultation to discuss your estate planning needs. We have offices conveniently located in both Fayetteville and Little Rock and are available to assist you throughout Arkansas.