Post Divorce Estate-Planning To-Do List

When your divorce proceedings have concluded and judgment has entered, it is important to remember that there is a post-divorce to-do list. In addition to ensuring that you are in compliance with all obligations included in the court orders with regard to property, child support, alimony, life insurance obligations, and the like, it is also important that you take this time to review your estate plan. Your estate plan should reflect these changes in your personal relationships and finances. Below is a list of items to review in connection with your estate plan after your divorce is finalized.

• Last Will and Testament

Under Connecticut law, any provisions for your former spouse under your last will and testament are revoked after an annulment or dissolution of marriage unless your existing will provides otherwise. However, all of the other provisions of the will remain valid. This means that if a former spouse was a beneficiary under your will, they are no longer a beneficiary, and if a former spouse was an executor under your will, they are no longer an executor. In effect, your will is going to operate as if the former spouse predeceased you. However, any provisions for a family member of your former spouse, such as their parents or siblings, remain valid. Therefore, even though all provisions for a former spouse are revoked after a divorce is finalized, it is prudent to review your will to ensure that it still meets your wishes and to update it if necessary. To avoid any confusion, it is generally recommended that you remove any references to your former spouse and any of their family members.

• Revocable Trusts

A revocable trust, sometimes called a living trust, is generally created in tandem with your will. However, unlike a will, Connecticut law does not provide for the automatic revocation of provisions for a former spouse under a revocable trust. If a former spouse was named as a trustee of your trust or a beneficiary of your trust, these provisions will remain valid after a divorce unless you act to change them. One of the major benefits of a revocable trust is that they are changeable at any time during your lifetime. Therefore, after a divorce, you should be able to easily remove your former spouse as a trustee or beneficiary under your trust by an amendment or restatement of your revocable trust.

• Irrevocable Trusts

An irrevocable trust is generally used in connection with gift and tax planning during the creator’s lifetime. Irrevocable trusts and revocable trusts are similar in that Connecticut law does not provide for the automatic revocation of provisions for a former spouse under an irrevocable trust after an annulment or divorce. However, unlike a revocable trust, irrevocable trusts are not easily changeable. If a former spouse is a trustee or beneficiary under an irrevocable trust that you created, there may be options to change this, but it would be advantageous to meet with an estate planning attorney to understand your options and determine the tax consequences of making any changes.

• Estate Tax Planning

If your estate plan, either in your will or in a trust, included any marital estate tax planning, this planning is no longer valid. After a divorce, the unlimited marital estate tax deduction at the federal and state level for estate taxes is no longer available because it is only available to legally married U.S. citizens. Therefore, it would be prudent to meet with an estate planning attorney to determine whether the loss of this marital estate tax deduction will make your estate subject to federal or any state estate taxes upon your death, and if so, whether there are any alternative planning options.

• Powers of Attorney

Under the Connecticut Uniform Power of Attorney Act, the authority of a former spouse acting as an agent under a power of attorney is terminated upon the filing of an action for the dissolution or annulment of the marriage, or upon legal separation, unless the power of attorney document provides otherwise. In effect, the former spouse is removed as an agent and whoever was named as a successor agent becomes the primary agent. The automatic termination in the event of a divorce, annulment, or legal separation does not apply to any family members of the former spouse, so if your former spouse’s brother is named as your backup agent, depending on your wishes, you may want to update your power of attorney. In any event, it is always best practice to review and update your power of attorney after a divorce, or even during the divorce proceedings.

• Advance Health Care Directives

Similar to powers of attorney, under Connecticut law, the appointment of your former spouse as your health care representative is automatically revoked in the event of a divorce, annulment, or legal separation from that former spouse, unless the document specifies otherwise. This means that the former spouse can no longer act as your health care representative and whomever you named as your secondary representative becomes the primary representative. Again, this automatic revocation only applies to the former spouse and not the former spouse’s family members. Therefore, you should review your advance health care directives either after the divorce or during the divorce proceedings to determine whether your current document matches your wishes.

• Beneficiary Designations

It is important to review your beneficiary designations after a divorce judgment has entered. Unlike other testamentary documents, beneficiary designations are not automatically revoked in the event of a divorce under Connecticut law.  While there have been efforts in the Connecticut legislature to pass a law mandating that a beneficiary designation of a former spouse be revoked in the event of a divorce, Connecticut has been unsuccessful thus far in that area. Thus, to the extent that no court orders say otherwise, it is important to understand that listing one’s former spouse as the beneficiary on life insurance policies, 401(k) accounts, defined benefit plans, Simplified Employment Pensions (SEPs), annuity contracts and the like will not be impacted by a divorce judgment. A failure to change one’s beneficiary designation prior to one’s death may cause the former spouse to receive these benefits instead of the person(s) that the deceased intended.

Additionally, in the event there are any court orders controlling the beneficiary designation of one’s life insurance policies, retirement assets, investment assets, and the like, the terms of that court order must be followed. However, the language in the Separation Agreement and/or Judgment of the marital dissolution action is not sufficient to actually change a beneficiary designation. You must complete a new beneficiary designation form with the account administrator.

The Trusts & Estates and Family Law practices at Pullman & Comley work together to ensure that a person’s testamentary wishes are protected while also following any court-ordered obligations provided for in your divorce judgment. To discuss your individual needs and circumstances, you may reach out to one of the Trusts and Estates or Family Law attorneys at Pullman & Comley, LLC.