How a Divorce Can Affect Your Estate Plan, Part 3: Powers of Attorney

 Posted on May 29, 2018 in Estate Planning

Over the last couple of weeks, posts on this blog have discussed how your estate plan could be affected by a divorce. The first post covered your will while the second post talked about the impact of a divorce on certain types of trusts. While wills and trusts are two of the most common estate planning tools, there are others that might need to be updated if you decide to get divorced, including powers of attorney for property or health care.

Powers of Attorney

A power of attorney refers to an arrangement in which a person—called the “principal”—gives legal authority to another person—called an “attorney in fact” or an “agent—to make decision on the principal’s behalf. A power of attorney can include a wide range of decision-making responsibilities, but there are two basic types. A power of attorney for property gives the agent the authority to make decisions regarding the principal’s assets, debts, and other property, while a power of attorney for health care allows the agent to act on the principal’s behalf in matters related to health and medical care.

Powers of attorney can be used for many reasons, but the most common is in case of an unforeseen incapacitation. For example, you may draft a power of attorney for property so that you can select someone else to manage your bank accounts or investments in the event you suffer an illness or injury that leaves you unable to make decisions on your own. For reasons such as this, it is not uncommon for a person to select his or her spouse to serve as the attorney in fact.

What the Law Says

As with wills and trusts, a finalized divorce will invalidate any provisions made regarding the principal’s spouse in a power of attorney document. This means that if you have named your spouse as your agent, a judgment of divorce or legal separation will withdraw your spouse’s authority. Specifically, the law in Illinois says. “The spouse shall be deemed to have died at the time of the judgment for all purposes of the agency.”

There are two very important points to keep in mind regarding the automatic revocation of your spouse’s agency. First, the law only applies to your spouse and your spouse alone. If you named your spouse’s brother, for example, as your power of attorney, your divorce will not invalidate that selection.

The second point is that only a finalized judgment will trigger the law to remove your spouse as your agent. While your divorce is pending, the signed power of attorney remains in effect and valid. If you become incapacitated during the proceedings, your spouse will still the authority to act on your behalf as specified in your power of attorney document. Therefore, it may be advisable to appoint a new agent while your divorce is pending or to seek a judgment of legal separation if you believe the divorce will drag on for some time.

We Can Help

If you are considering a divorce and have questions about your estate plan might need to be changed, contact an experienced Lombard estate planning attorney. Call 630-426-0196 for a confidential consultation at A. Traub & Associates today.

Sources:

https://www.thebalance.com/estate-planning-documents-to-update-for-divorce-3993981

http://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=2113&ChapterID=60