As Forbes reports this week, nothing can turn your New York estate plans upside down like divorce.
New York City trust attorneys understand divorce can be an emotional time. Unfortunately, a lack of planning means some will never regain the financial ground and standard of living lost in a divorce. For others, who ignore the need to update an estate plan, outdated beneficiaries can cause a real headache for heirs and can even result in assets being transferred to a former spouse.Changing the beneficiaries on life insurance, 401k plans and IRAs is just the beginning, and even that is often overlooked. Failure to make the proper changes — whether to your Will or to the designation on various accounts — can result in leaving an inheritance to your former spouse, particularly if a death occurs before a divorce is final. For long, contested divorces, a separation agreement may be considered, one of the benefits of which is to keep such an inheritance from occurring.
In most states, you cannot completely disinherit your spouse until the divorce is final — just as you cannot use various trusts and other investment vehicles to withhold a spouse’s rightful share of inheritance while you are married. In New York, the spouse is presumed to get at least one-third of an estate with children and one half of an estate without children.
Once a divorce is finalized, you should immediately update your Will and other estate plans if you have not already done so. In fact, in an ideal world, you should update such documents before even filing for divorce. This includes updating medical directives and a financial power of attorney. Selecting new beneficiaries for life insurance policies and retirement accounts can also be done at this time — though some require the consent of a spouse and will have to wait until after a divorce is finalized.
After divorce proceedings have begun, it may be impossible to make such changes. Restraining Orders may be in place to make sure both parties assets and ownership interests don’t change until the final divorce decree.
New York City Probate Attorney Jules Martin Haas handles all types of probate cases, including Wills, estate planning, estate settlement, advanced directives and guardianship matters. Please call me at (212) 355-2575 for a free consultation to discuss your rights.