If you are going through a divorce, or you’re considering filing for one, you’re probably dealing with many stressful questions and decisions. You may even be concerned about the possibility of your soon-to-be ex-spouse making financial and medical decisions on your behalf.
Not everyone thinks about estate planning during a divorce, but it’s actually one of the most critical steps you can take to protect yourself and your property during and after divorce proceedings. Here’s our advice.
How your divorce impacts Wills & trustsIn Oregon and Washington, Wills and trusts are not affected until a divorce is finalized. So, if you have already signed estate planning documents (either with your spouse or on your own), filing for divorce won’t change them. Likewise, filing for divorce doesn’t change the legal default rules (called the laws of intestacy) that determine what happens to your assets if you pass away without an estate plan.
Once the divoce is final, this is what happens:
- Any provisions in your existing estate plan that are in favor of your ex-spouse are revoked
- Unless the documents specify otherwise, your former spouse is treated as though they predeceased you
- If you have no estate plan, your assets go to your nearest living relative (not your ex-spouse)
If you’re ready to create or change your estate plan, here’s what to do:
Specify your health care wishesUnless your estate plan says otherwise, your spouse is the person with priority to make both financial and health care decisions for you if an accident or medical emergency leaves you incapacitated. That means that, if you become incapacitated before your divorce is final, your soon-to-be ex-spouse has the authority to make important decisions about questions like enteral nutrition (using a feeding tube), life support, and how to manage your finances.
Many people are uncomfortable with this situation, which is understandable. If you prefer to give the responsibility of making these decisions to a different person, here’s what you need:
An Advance Directive lets you name a trusted friend or family member to make health care decisions for you if you are ever unable to communicate your wishes.
A Power of Attorney authorizes someone you trust to manage your finances if you can’t manage them yourself.
These are important tools for anyone, regardless of marital status. Working with an attorney to properly execute them before your divoce is final means they’ll be effective now and after your divorce. Hopefully they will also give you some peace of mind during the divorce process too.
Change (or create) a Will or trustAlthough there are a few exceptions, you have the right to change or execute an estate plan at any time, including during a pending divorce. In fact, a divorce is often an excellent time to create a Will. If you currently have a Will that you’re no longer happy with, you can choose to revoke it.
Things get more complicated when it comes to trusts, though. If you have a revocable trust and you’re the only trustee, you can make changes. Because trusts are more complex documents, you must be careful doing this, and there may be certain things in your trust that you can’t change. For example, you may not be able to change the nature of the assets held by the trust without violating the asset restraining order that’s in place during every divorce (we’ll talk more about that next).
Changing your estate plan becomes even more complicated if:
- You have an irrevocable trust
- You have a joint trust with your spouse
- Your spouse is also a trustee
Don’t violate the asset restraining orderThe asset restraining order is designed to protect both spouses. Neither spouse is allowed to sell, hide, encumber, or otherwise dispose of their assets until the divorce is final. As you can imagine, this can affect your ability to make changes to your estate plan. For example, you may not be able to:
- Change the beneficiary designations on your retirement accounts or life insurance policy
- Transfer assets in or out of a trust during the divorce
If you want to make changes before then, an experienced local attorney will be able to help you execute the necessary estate planning documents without violating the asset restraining order.
Understand your state’s elective share & community property lawsMost states, including Oregon and Washington, also have laws that prevent spouses from completely disinheriting each other.
In Oregon, for example, if a deceased person’s estate plan makes no provisions for their spouse, the spouse is entitled to their “elective share” — a percentage of the total combined assets of both spouses based on how long they were married (33% is the highest elective share for a marriage that lasted 15 years or longer).
Washington, on the other hand, is a community property state, which means that all assets acquired during the marriage are jointly owned by both spouses. Certain assets, like inheritances, are not community property.
In both states, though, the court has some flexibility when it comes to awarding property to a surviving spouse. The judge will look at the whole picture and may consider factors like: the length of the marriage, the cause of separation, and each person’s financial situation. If the couple were in the middle of a divorce, that could affect the judge’s ruling too. If the spouses were separated, the judge may determine that a lesser amount is reasonable and proper under the circumstances.
How to protect your assets and plan for your futureWhile no divorce is easy, working with an attorney to update your estate plan can help you protect your property and prepare to move forward with your life. Make sure you choose an estate planning attorney who understands the restrictions in place during divorce in your state.
The family law and estate planning lawyers at Gevurtz Menashe have deep knowledge of divorce and estate planning laws in both Oregon and Washington. We can help you ensure that you and your assets are protected during and after your divorce.
Call our Portland offices at 503-227-1515, our Vancouver offices at 360-823-0410, or contact us online to get started.