Research tells us that the divorce rate today is around 40% of all American couples. If you add in, however, separated couples this number increases to close to 50%. While completing estate planning for your family when you are divorced seems logical to many individuals, we are seeing more and more couples who are separated not take the step to correct their estate plan. This is an unfortunate scenario as it is arguably even more important to update your estate planning when you were separated.
Recent celebrity deaths, including Kate Spade and Anthony Bourdain, illustrate the importance in the news of creating estate planning for when you were separated. Although none of us want to think about a time when we will be divorced or separated, or that we should become incapacitated or pass away during that time, this type of planning is critical to ensure that we are protected should the time come.
Although many spouses separate on good terms and remain that way, they still must consider the legal ramifications of separation on their estate planning. Separate couples often enter into new relationships, have more children, and continue to grow in their professional life. This growth needs to be reflected in your estate planning. What you may not know is that while you are separated, even if it has been for a number of years, your spouse still has legal rights to your person and to your assets.
For some separated couples this may be an ideal situation but many wish for their separation to be complete on all matters. Without speaking with your estate planning attorney and planning forward, however, this may not be the case. Let us share three things for you to consider in revising your estate planning to reflect your separated status.
1. Your decision maker in times of crisis. When you become separated from your spouse, this does not mean that he or she is legally removed from the chain of command should you become incapacitated. While divorce in many states will make a beneficiary designation or agent under your durable power of attorney null and void, this is not the case when you’re separated from your spouse. If you do not want your spouse to make decisions for you in the event of a crisis or at your death, you need to be proactive and create documents that reflect this choice. You do not want to leave this to chance because if you do your former spouse may be left to make decisions for you should you be unable to make them for yourself.
2. Your ultimate beneficiary. If you are separated but not divorced, you also need to change your estate planning to reflect who you want to be your beneficiary. Under most estate planning documents for couples, the surviving spouse will inherit everything at the time of death of the first spouse. You need to change your estate planning to reflect who you want to inherit from you. Bear in mind that in many states your spouse has statutory protections to ensure they inherit from you. This is referred to as the elective estate. If you are separated, you will need to work with your estate planning attorney to avoid this form of mandatory inheritance. Further, you will want to look at any of your payable on death or transfer on death accounts such as life insurance, long-term care insurance, or retirement plans, to make sure that you’re separated spouse is no longer the beneficiary.
3. Your minor child’s guardian. Under estate planning documents, your minor child cannot inherit from you until he or she reaches the age of majority. Often, the surviving spouse is made the guardian of the minor child’s funds through your estate planning. Should you become separated, you may not wish for your former spouse to be in charge of these accounts for your child. Discuss your plan and goals with your estate planning attorney together with whether or not you have the right tools to reach them. You may wish to choose an independent custodian of your minor child’s funds until he or she reaches the age of majority.
4. Choose the guardian of your legacy carefully. Estate planning is about creating a legacy for your family when you are no longer here. You want your family, your friends, your business, and your charities, to know what matters most to you. Without a spouse to carry on your legacy for you, think about who should be the custodian of your legacy. You can work with your estate planning attorney to design documents that specifically leave an inheritance that will show what matters most to you. Whether it is a collection, photos, or items of family history, it is critical that when you and your spouse separate you ensure there is someone who can carry-on what matters most to you.
We know that this article may raise more questions than answers. If you are separated from your spouse, or thinking about separating, now is the time to start thinking about the revisions you need to make sure you have the estate planning you need. Do not wait to schedule an appointment with attorney Anthony Bradley today so we may help you.