Anyone who is contemplating a divorce, is in the process of obtaining a divorce, or is recently divorced should think about estate planning. If you are still married, your spouse is considered your heir. So, an untimely death before your divorce is finalized will result in your spouse receiving some or all of your estate. If you are recently divorced, your ex-spouse may still receive a portion of your estate unless you make changes to direct the assets of your estate where you want them to go. Probably not to your ex-spouse.
If you are thinking about a divorce, going through a divorce, or recently divorced, you are probably very familiar with the idea of marital property and nonmarital property. When it comes to estate planning, the law doesn’t distinguish between marital property and nonmarital property. Where your estate will go is based entirely on other principles.
If you haven’t done any estate planning, your estate will go to your heirs, which are determined by the Illinois Probate Act. If you have assets with beneficiary designations, those assets will go to those beneficiaries that you have designated – even if you have changed your mind (but haven’t changed those beneficiary designations). If you have done estate planning, the portion of your estate that is subject to your estate planning, whether it is a Will or a Trust, will go to the beneficiaries named in those documents.
If you have done your estate planning, your documents will control, regardless of whether you have changed your mind. You could tell a million people that you don’t intend to leave anything to your spouse, and you can even be divorced, but your estate will go where your documents say it goes – unless you change it.
One of the first and easiest things you can do is to review your assets that have beneficiary designations and change those beneficiary designations right away. If you don’t remove your ex-spouse as the beneficiary of your life insurance, for instance, your ex-spouse is going to receive your life insurance. This is true even if you are divorced. It’s a simple matter to change your beneficiaries so this is the first thing you should do.
Joint bank accounts and bank accounts that have payable on death designations should also be changed. Even if you are just thinking about a divorce, or in the middle of a divorce, you might consider moving assets from a joint account to an account in your name, alone. If your individual bank accounts have payable on death designations, you need to check those designations and change them if they no longer reflect your desires.
Another thing to think about that can be done immediately is to change any access to your online accounts that your spouse or ex-spouse may have. You shouldn’t wait to make these changes. Your spouse will continue to have access to those accounts regardless of the status of your marriage. You can also designate who has access to those accounts when you die.
The Revised Uniform Fiduciary Access to Digital Assets Act (755 ILCS 70/1 et. seq.) allows you to control disclosure of your digital assets and content as well. Most major online providers offer an online tool allowing you to designate who may have access to your accounts and information in the event of your demise. The online tools will take precedence over any Will or Trust or other document.
Powers of Attorney are the next thing you should think about. Powers of Attorney allow you to designate people that you trust as your agents to have access to your information and make decisions for you if you become unable to make decisions for yourself. We tend not to think about the possibility of becoming incapacitated during marriage because we count on our spouses to support us, provide for us and help us in situations like that. If you can’t count on a spouse, though, you need to choose someone else you trust who can help you.
If you have already done Powers of Attorney naming your spouse as your primary agent, you need to change those immediately.
If you don’t have a Healthcare Power of Attorney, for instance, even if you are contemplating a divorce or in the process of getting a divorce, the Health Care Surrogate Act will give your spouse decision making control by default. If you don’t want your spouse having control, you need to do Health Care Powers of Attorney designating who you want to be your agent to make health care and personal decisions for you if you can’t make them for yourself.
Of course, the ultimate estate planning tools are a Will or a Trust. Doing a Will, at a minimum, will ensure that your estate goes to the people you desire to receive it and is controlled by the people you desire to control it. A Will is not the best tool to use if you are still married, however. A spouse can renounce a Will and take a statutory fifty percent (50%) of your estate, regardless of your intention expressed in the Will.
The way to ensure that your spouse will not receive your estate (if you are still married) is to do a Revocable Trust. Spouses cannot renounce a Trust, so a Trust is the best assurance that your estate will go to the people you desire to receive it.
Even if you are no longer married, a Trust is the best way to control how your estate will be handled. If you ever get remarried, the assets in the Trust will be considered nonmarital property as long as they remain in the Trust.
Most people who are thinking about a divorce, are going through a divorce or are recently divorced are probably not thinking about estate planning. A divorce has a way of eclipsing other concerns, but it shouldn’t. Your life, in a sense, is starting over. You have an opportunity to reset your life and to create new plans for your future and the future of your loved ones. Estate planning is a key part of starting your life over during and after a divorce.Kevin G. Drendel Drendel & Jansons Law Group 111 Flinn Street Batavia, IL 60510 (630) 406-5440 (630) 406-6179 fax [email protected] foxvalleyestateplanning.com