The Effect of Divorce on Your Estate Plan
An unfortunate, but common, scenario: You and your spouse get divorced. You remarry, but die shortly thereafter. Your loved ones discover that amidst all the excitement of your divorce and remarriage, you forgot to update your estate plan. Your will and beneficiary designations all leave everything you own to your first spouse. What happens now?
You may be surprised to learn that in Virginia, unless otherwise provided in the divorce decree or your separation agreement, a divorce automatically revokes some provisions of your estate plan, while having no effect on others. Here is a summary on the effect a divorce may have on each of aspect of your estate plan.
Wills
Va. Code § 64.2-412(A) provides that upon divorce or annulment, any provision in a client’s existing will in favor of a former spouse is revoked. This includes not only provisions leaving assets to the former spouse, but also provisions conferring a general or special power of appointment or nominating the former spouse as an executor, trustee, conservator, or guardian. If there is a remarriage between the parties, though, the provisions made for the former spouse in the will are revived.
Relying on this Code section rather than updating your will would be a mistake, however. Why give your former spouse something else to argue about in the event of your death? Go the extra mile and update your will following a divorce.
Trusts
The Uniform Trust Code (Va. Code §§ 64.2-700 through 64.2-808) does not provide for the revocation of a trust or its provisions (including the naming of a former spouse as trustee) either upon the filing of a divorce action or upon entry or a final decree of divorce or annulment. In other words, if your revocable trust left everything you own to your wife Mary upon your death, but you and Mary are divorced, Mary is nonetheless entitled to receive everything.
Because divorce has no effect on a trust, you must amend or revoke your trust agreement to avoid your assets passing through it to a former spouse and your former spouse serving as trustee.
Power of Attorney
Va. Code § 64.2-1608(B)(3) provides that the authority of an agent under a power of attorney terminates (1) when an action for divorce or annulment is filed, (2) upon the parties’ legal separation, or (3) by either the agent or the principal when an action for separate maintenance from the other is filed, or when the action for custody or visitation of a child in common is filed.
Due to the contentious nature of divorce, you should revoke any existing power of attorney upon your separation rather than waiting for the entry of a final divorce decree, regardless of whether the power of attorney is effective immediately or only on your incapacity, to prevent your soon-to-be former spouse from handling your affairs without your permission. Give a copy of the document revoking the power of attorney (or your new power of attorney) to any financial institutions and third parties who are in possession of the prior power of attorney, to put them on notice that if the soon-to-be former spouse attempts to use the prior power of attorney, it is no longer valid. A third party cannot be held liable for accepting a revoked power of attorney, if it has no knowledge that the power of attorney is no longer valid.
Advance Medical Directives
The Virginia Health Care Decisions Act (Va. Code §§ 54.1-2981 through 54.1-2993) does not provide for the automatic revocation of an advance medical directive (sometimes referred to as a “living will” or “medical power of attorney”) upon separation or divorce. Therefore, if you become separated or divorced, you should revoke any existing advance medical directive which names your former spouse as an agent.
Designation of Individual to Make Arrangements for Disposition of Remains
Va. Code § 54.1-2825(A) gives individuals the authority to name someone who will be responsible for the “arrangements and be otherwise responsible for his funeral and the disposition of his remains, including cremation, interment, entombment, or memorialization, or some combination thereof, upon his death,” in a signed, notarized writing. Divorce has no effect on the naming of a former spouse as the agent under this document; therefore, if you have signed a designation naming your spouse to handle these arrangements, be sure to revoke it.
Beneficiary Designations
Under current Virginia law, upon entry of a divorce decree, “any revocable beneficiary designation . . . that provides for the payment of any death benefit to the other party is revoked. A death benefit prevented from passing to a former spouse by this section shall be as if the former spouse had predeceased the decedent” (Va. Code § 20-111.1(A)). This includes payments from life insurance policies, annuities, retirement accounts, compensation agreements, and any other contracts which provide for the payment of benefits to a spouse at death. This does not apply, however, if the divorce decree provides otherwise, or if the law is preempted by federal law. For example, federal employees’ group life insurance (FEGLI) that names a former spouse as beneficiary will be paid to the former spouse regardless of whether a divorce decree has been entered. Don’t rely on the Virginia statute providing for the revocation of a beneficiary designation upon divorce; provide for your loved ones by updating beneficiary designations to name the individual(s) you wish to inherit your assets at your death.
As you can see, divorce affects different aspects of your estate plan in different ways. Don’t rely on Virginia’s default rules about which portions of your estate plan will be revoked automatically upon your divorce; take matters into your own hands by meeting with an estate planning attorney to make all changes necessary in the event of your separation or divorce.
Ask Kit Kat – Bear in a Bucket
Hook Law Center: Kit Kat, what can you tell us about the bear who got its head stuck in a plastic cheese puff bucket?
Kit Kat: This was one lucky bear! It happened in Glenwood Springs, CO during the week of July 18. It was a 2-year old bear, and somehow he got his head stuck in a cheese puff bucket. Those tasty snacks were just too much to resist. When anyone tried to help, he would scamper off. A local Good Samaritan, Jim Hawkins, age, 66, decided to take things in his own hands. He got some heavy duty gloves and some rope and waited for the bear to show up again. Hawkins owns a bed and breakfast, and the bear walked right into the B & B’s backyard. Hawkins lassoed the bear around its middle, and a tussle ensued. The bear then ran up a tree, and Hawkins tied the rope, so the bear couldn’t move. Hawkins suffered minor scrapes on his forearms. Next, Hawkins called Colorado Parks and Wildlife. Personnel from the agency came, tranquilized the bear, and removed the bucket. They also relocated the bear to a less populated area 12 miles away.
Hawkins, a retired firefighter, was quite brave! He himself doesn’t think his gallantry was so unusual. He definitely made a calculated decision. He weighs 200 pounds, and he estimates the bear weighed about 100 pounds. He laughs off his actions with this quote, “This was a little bear with a big problem.” (https://www.washingtonpost.com/news/animalia/wp/2016/07/23/this-man-rescued-a-bear…)
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