How Divorce Affects Estate Plans, Wills, and Beneficiary Designations in New York
Divorce impacts almost all aspects of your finances, yet few realize that one of those areas needs serious consideration. That, of course, is your estate plan. The will written before your divorce, the beneficiaries of your life insurance, and powers of attorney can be outdated once you have obtained a divorce decree.
Even though under New York laws, some of the estate planning items are resolved automatically after a divorce, there still remain some documents/accounts that do not get updated on their own. Checking your estate plan after divorce should be one of your priorities.
Does divorce automatically change your will?
In the State of New York, divorce will automatically nullify any gifts in a will made to a former spouse. Your former spouse would be considered predeceased for the purposes of inheritance from your current will.
But that does not necessarily mean that your estate planning is done and up to date. For example, your former spouse could be mentioned in your will as an executor or a guardian for your minor children. These aspects would need to be revised by a qualified estate planning lawyer.
The easiest way to ensure that your last wishes are clearly stated is to create a new will after the divorce.
Review your beneficiary designations
Many of your financial investments do not go according to your will but instead go straight to named beneficiaries. This includes:
- Life Insurance
- Retirement funds like 401(k) and IRA accounts
- Payable-On-Death (POD) bank accounts
- Transfer-On-Death (TOD) investment accounts
Even though New York laws might void some of your designations or beneficiaries in your former spouse’s name, you must consider the exceptions. For instance, federal laws may control some retirement accounts, and an account agreement may have another outcome.
Instead of waiting for legal exemptions, you should always check all your designated beneficiaries after a divorce.
Powers of attorney and health care directives
If you appointed your spouse to act as your health care or financial proxy, it is important that you assess the appropriateness of that designation.
Though some powers might automatically be revoked by virtue of a divorce, there will be no room left for any doubts once you update your power of attorney and healthcare proxy designations.
Consider the impact on your children
In addition to other matters, divorce can also affect your financial goals. For example, if you have children, you might need to review your estate plan to ensure your legacy goes to them as intended.
This will depend on the financial circumstances you might be experiencing after your divorce, but it might involve establishing a trust, appointing a guardian for your children, or assigning an asset manager until they become adults.
Talk to a Westchester County, NY, Family Law Attorney Today
The Law Office of Robert S. Sunshine represents the interests of divorcing couples in Westchester County. Call our Westchester County family lawyers today to schedule an appointment, and we can begin discussing your next steps right away.
