“Divorce and Estate Planning”

DIVORCE and ESTATE PLANNING

Quite often I am asked by individuals who have recently gone through a divorce: “Do I have to do anything about my estate plan now that I am no longer married?” The answer often depends upon whether they have a Will or Trust Agreement already in place, and if so, whether they are satisfied with the existing alternate provisions.

A Judgment of Divorce and accompanying property settlement should deal not only with the division of property between the parties but should also specify that the provisions in an existing Will, Trust Agreement, Power of Attorney, and Funeral Representative Appointment, among others, naming the former spouse (or his or her relatives) as beneficiaries, personal representative, trustee, conservator, guardian, agent under a power of attorney, or funeral representative, are revoked upon entry of the Judgment of Divorce. If the Judgment does not provide for this, a Michigan statute provides that the entry of a Judgment of Divorce automatically revokes such provisions or appointments in these instruments. However, the Judgment of Divorce or a pre-nuptial agreement can change or modify such “automatic” provisions, if expressly stated in the Judgment.

If you had a Will, Trust Agreement, Power of Attorney, or Funeral Representative Appointment in place at the time of the divorce, you should review these documents to see if you have: (1) named an alternate person(s) to receive your property upon death (in the Will or Trust Agreement); (2) have named an alternate Personal Representative under your Will or Trustee under your Trust; (3) have given another the power to act as your agent under a power of attorney; and (4) have named another to act as your funeral representative, in lieu of your ex-spouse. If you have and you are satisfied with the person(s) you have named, then there is probably nothing more you need to do, other than taking the former spouse off as the named beneficiary of your life insurance policies and retirement accounts and naming another person(s) as beneficiary.

If you do not have a Will or Trust Agreement, then your property will eventually pass by intestate succession under the provisions of Michigan law. As you are no longer married, your ex-spouse (and his/her relatives) are treated as if he/she had predeceased you; i.e. they will get nothing. In such case, if you are comfortable with the disposition to be made of your property under Michigan law, and the fact your property will likely have to go through Probate and a Probate Judge will determine who will have to act as your Personal Representative, or serve as the guardian and/or conservator of your minor children, then again, you probably don’t need to anything other than changing the named beneficiaries on your life insurance and retirement accounts. These proceeds go directly to the named beneficiaries and do not become part of your probate estate unless you have not named a beneficiary or have named your estate as the beneficiary.

If you have an obligation to repay your ex-spouse a certain sum of money under the Judgment of Divorce, or have to turn over some specific property, and this obligation is secured by having to continue to name your “ex” as the beneficiary of a life insurance policy until the time monies are paid or the property is turned over, then be sure to change your beneficiary after this occurs. If you do not do so, when you are gone, the Probate Court may determine that, despite your divorce, you continued to intend on making your ex the beneficiary of such life insurance policy by not changing the named beneficiary after the debt was satisfied. There is certainly nothing in the law that prevents this and this may have been your intent. Just make sure that this is not presumed to be your “intent” by failing to make such a change after the divorce obligation has been satisfied.

While the Michigan statute that automatically revokes certain provisions that relate to a former spouse in a Will, Trust Agreement, Power of Attorney, and the like, it does not specifically mention Patient Advocate Designations under what are sometimes referred to as a “Living Will” or a “Durable Power of Attorney for Health Care”. These instruments allow you to nominate someone(s) to make medical decisions for you, if and only if you cannot make those decisions yourself. However, there is a “catch-all” provision that revokes the nomination of a former spouse (or a relative of the former spouse) to serve in a fiduciary or representative capacity, including serving as a “conservator, agent, or guardian”. A person certainly is acting as an “agent” and has certain “fiduciary” obligations to follow the Patient’s directions in making medical decisions for the patient in acting as their Patient Advocate under such instrument. Although not specifically mentioned in the Michigan statute, there is no question, in this author’s opinion, that such instruments are also covered and the nomination of the “ex” is automatically revoked upon entry of the Judgment of Divorce. If you have not named someone other than your former spouse as your agent for health care matters, you should look at naming an alternate, as their powers to act will be revoked by operation of Michigan law upon entry of the Judgment of Divorce.

The entry of a Judgment of Divorce has varied financial effects, not the least of which is on your estate plan. Consequently, it is a good time to revisit what you have in place (if anything) and to put your affairs in good order. If you need assistance in estate planning after a divorce, please do not delay and potentially have some of your “stuff” go to someone you no longer desire to receive the fruits of your labors. Call the estate planning professionals at Damon, Ver Merris, Boyko & Witte, PLC, today at (616) 975-9951. They will help put your affairs in order, set your mind at ease and develop a plan that is right for you. Don’t put this off and leave it to some court to figure out what you intended; call now. – Larry A. Ver Merris / May 7, 2018