Your divorce is over. Your marital property has been divided, and you know what assets are yours. You are exhausted yet relieved that the process is finally over. It’s time to relax and recover, right?
Estate planning after divorce is often neglected. It is so easy to become wrapped up in the emotion of the process that one neglects to remember to protect their newly separated assets. If you had an estate plan as a married person, that plan most likely does not work for you now, and it should be updated and amended. Chances are that your old Will provided for your spouse. Under Pennsylvania law, spousal provisions become automatically void upon the issuance of your divorce decree. If you had no estate plan at all, it is equally important to put one in place now.
Estate planning after divorce is an essential step to plan for your future. While there are many estate “forms” that can be obtained on the internet and elsewhere, you should not rely upon these generic forms to meet your specific needs. Consulting with an attorney ensures the creation of an estate plan that is legally enforceable and will address your individual needs. The following documents are those which you should consider:
An easy first step is to review and potentially amend the beneficiary designations of your life insurance, investment, and retirement accounts. It is common for married persons to designate their spouse as beneficiary on such accounts. Your individual plans for these accounts may have now changed. Make sure to consult with your family law attorney before you change these designations, as there may be certain requirements to maintain these beneficiary designations, even post-decree. If there are none, post-decree is an appropriate time to make changes.
Be mindful that in Pennsylvania, The Pennsylvania Uniform Transfers to Minors Act (PAUTMA, formerly known as PUGMA) does not permit a minor to exercise their right to the use of property until they are 18, meaning that gifts will, in essence, will be frozen from use and placed in a Court-monitored Trust. If you wish to name your minor children as beneficiaries, talk to your attorney or financial advisor about the proper language to use to insure your child could benefit from the funds while a still a minor (using a trust or a nominating a custodian), if that is your intention.
Power of Attorney
A Power of Attorney is a document that “speaks” while you are living but unable to act for yourself. It gives another person, your agent, the power to make financial transactions on your behalf. Typically, a secondary agent is also selected by you in the event that your first agent is unwilling or unable to act on your behalf.
The agent can perform tasks such as paying your bills, handling your bank accounts, and making financial decisions. In doing so, your agent (1) must act in accordance with your reasonable expectations to the extent known by the agent, and otherwise in your best interest; (2) act in good faith; and (3) act only within the scope of authority granted in the power of attorney. Generally, this document provides powers to your agent, which last until your death or your revocation of the document.
Health Care Directive/Living Will
Like the Power of Attorney, a Health Care Directive or Living Will is a document that “speaks” while you are living but unable to make health care related decisions for yourself. It gives your agent the power to make these decisions on your behalf. These documents can be very specific and address the types of treatment and/or procedures you do or do not wish to have performed in the event of various medical scenarios. The document can force your agent to follow your instructions, or it can give your agent the ability to override your directives if they believe you would have made a different decision with the information presented at the time of your inability to consider same.
Last Will & Testament
A Last Will & Testament is a document that “speaks” at your death and directs who will inherit your property, serve as Executor of your Estate, carry out your wishes and handle your final financial matters, take over as the guardian of your children, and serve as the trustee of any assets left to your children. If you pass without a will, the state intestacy laws direct who inherits from you. Such laws may be contrary to how you would want your property to be transferred, which is the primary reason you should, at minimum, have a will.
A trust is a document that allows the grantor (the person who creates the trust) to transfer assets into a trust during their lifetime, with the goal of transferring assets at death without the need to go through probate (the legal process which distributes a deceased person’s property). There are several different types of trust, some of which can be complicated.
In general, trusts can be revocable, which means it can be revoked or changed during the lifetime of the grantor. They can also be irrevocable, meaning it cannot be changed or revoked. There are pros and cons to each type of trust, which can be discussed with your attorney, who will help you assess which type of trust meets your needs. Benefits of a trust could provide include protecting your assets for the benefit of your beneficiaries, placing conditions upon how funds in the trust are spent and dispensed, providing funds for educations purposes, providing funds for charitable institutions, avoiding or reducing estate tax; protecting assets from creditors, protecting assets from transferring to unintended persons, and protecting business assets.
Pittsburgh Family Law Attorneys
Liberty J. Weyandt, Esq. is a Partner and Chair of the Family Law Practice Group at The Lynch Law Group. She is dedicated to assisting clients who are seeking solutions to complex family law and estate planning matters. In addition to traditional litigation experience, Liberty is also a trained Collaborative Law attorney and Mediator.
Please contact Liberty at (724)776-8000 or email@example.com for more information about developing a post-divorce estate plan or for information on other family law matters.