Changing Your Estate Plan to Account for Your Divorce

 Posted on May 10,2017 in Estate Planning

People tend to forget or overlook things when they divorce. Dotting every proverbial “i” and crossing every proverbial “t” can be a difficult endeavor, especially when there are children involved. One of the most commonly overlooked issues—especially if a divorce is complex or acrimonious—is estate planning. Updating or re-drafting documents like wills and trusts can make all the difference in ensuring that your assets go to those who you have expressly chosen.

Make a New Will or Trust

Illinois probate law can be quite complex, particularly if you are trying to modify an existing document. This is made even more confusing by the fact that Illinois law, upon divorce, revokes any gifts or positions of authority given to an ex-spouse. For example, if you named your now-former husband as the executor of your estate, that designation will be void upon your divorce. Sometimes this can be advantageous, but in certain cases, you may want to keep your ex-spouse in the will. Doing so may be beneficial in situations where young children are involved as potential beneficiaries.

Most divorce attorneys advise that if you divorce after executing a will or living trust, the easiest solution is to simply revoke it—physically destroying it is often the simplest course of action—and to draft a new one. This way, you are able to designate new trustees or beneficiaries without the mess of having to modify the old document to exclude the ex-spouse. If you want your ex-spouse to be remembered in your will, you may include him or her as you see fit. There is nothing prohibiting you naming your ex-spouse in the will; the law simply revokes all gifts in previous wills so as to protect against possible fraud.

Changing Insurance Beneficiaries

Some assets are not usually addressed by wills, including insurance policies and retirement accounts like IRAs. You must change the beneficiaries on these instruments yourself, or they will be awarded to your spouse or whoever you named as beneficiary when you last updated your policy or account. Illinois’s law revoking gifts only applies to those conveyed by will or trust. Instruments like retirement accounts are even more tightly regulated, falling under the federal Employee Retirement Income Security Act (ERISA) which mandates that the appropriate official must turn over the asset in question to the named beneficiary

To change a beneficiary is usually a matter of completing the necessary paperwork with your bank or plan administrator. However, it is important to keep in mind that if you name your children, the proceeds may go essentially to your ex-spouse anyway. In Illinois, as in most other states, if you name your children as beneficiaries and they are minors when you die, the assets will be placed under the control of a guardian until the children reach the age of majority. It is extremely common for the court to assign that duty to the surviving parent.

An Attorney Can Help

Proper estate planning can make a significant difference in your life and the lives of your loved ones. If you need help modifying yours after a divorce, it is best to consult a knowledgeable attorney. Contact an experienced estate planning lawyer in Lombard and get the guidance you need from a team who cares about you and your family. Call 630-426-0196 for a confidential consultation today.

Sources:

http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=075500050K4-7

http://www.dol.gov/general/topic/health-plans/erisa