Carefully consider changes to your estate plan during or after divorce

March 28, 2014 (Press-News.org) When going through a divorce, it may feel like your life is completely changing. Many things may feel uncertain, and the amount of time and attention you have to spend on paperwork and details may leave you feeling overwhelmed.

You may be tempted to make drastic changes during a divorce proceeding, particularly to things that would otherwise result in your spouse benefiting financially. However, there are some things that should only be adjusted after careful consideration of the law, or with the counsel of an attorney. On the other hand, some things change immediately upon the commencement of a divorce proceeding.

Changes that happen automatically

The Minnesota Bench and Bar Association has published useful information about changes to estate planning tools, that automatically take place upon the commencement of a divorce proceeding. For example, a power of attorney and healthcare directive in favor of a spouse are automatically revoked.

When commencing divorce proceedings in Minnesota, by statute, language in the "summons," which is the initial order to begin the divorce, requires that the parties to the divorce abide by certain restrictions applicable to estate planning changes.

Changing your life insurance beneficiary

It is very common for one to list their spouse as the primary beneficiary on their life insurance policy, if they have one. If you are in the process of filing for a divorce, you may desire to change the beneficiary designation so that the proceeds will benefit your children, or someone else. However, you should consult with an attorney before making a change like this. Language in the summons restricts this type of change, so a person who decides to make a change could be subject to negative consequences.

Sometimes, spousal maintenance, child support payments, or property settlements as a part of a separation agreement or divorce, are negotiated in a way that life insurance is put in place to ensure that the payments continue for a certain period of time, extending after the person passes. Additionally, according to In re Estate of Heinz, a case from the Court of Appeals of Minnesota, there could be negative consequences for a party to a divorce, who lets a life insurance policy lapse, or who "encumbers" the policy, by borrowing against it or taking out a loan against it.

Changing your will

While certain actions are barred while a divorce proceeding is pending, others are not. There is no restriction in Minnesota against executing a new will while you are in the process of divorcing your spouse. In fact, it is important to update your will to adequately represent how you choose to divide your assets upon death.

If you are considering a divorce, it is important to seek the assistance of an experienced attorney to guide you through the process. An attorney can help prevent you from making any decisions or changes that could be against a court order, or that could otherwise negatively influence your case. An attorney can also help show you what changes are appropriate, encouraged, or even necessary to attain your goals in the process.

Article provided by Coodin & Overson, PLLP
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