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Rusk, Wadlin, Heppner & Martuscello, LLP Celebrating 150 years

How your Estate Plan is Affected by Your Divorce or Separation

Glasses and estate plan document

Getting a divorce or entering a legal separation is a stressful time, full of countless changes and legal complications. While you may not realize it, updating your estate planning documents should be among your top concerns when ending a marriage.

Divorced spouses disinherited automatically

When you obtain a divorce or judicial separation in New York, your spouse will automatically be treated as though they died before you for the purpose of distributing your estate. Your spouse will also no longer be listed as the executor of your will, or the person entrusted to make health care decisions on your behalf, should you become incapacitated. That said, these changes only take effect after a divorce or separation is final. Should you pass away unexpectedly before the process of separating or divorcing is completed by the court, your spouse will be entitled to inherit whatever amount you’ve left for them in your will.

Designated beneficiaries automatically changed

During your marriage, you probably listed your spouse as your designated beneficiary on accounts such as your life insurance, IRA, or investment accounts. Most such designations allow you to list more than one beneficiary, so that if the first is no longer available, the property will go to the secondary beneficiary. New York law provides that, when you divorce or obtain a judicial separation, the designation of your spouse as beneficiary will automatically be revoked.

While it may sound like a relief that your estranged or former spouse will not inherit the entirety of your life insurance benefit or IRA should you pass away, there are many reasons why this automatic change in status may not be an ideal outcome. Normally, such assets would pass directly to the named beneficiary rather than passing through probate. However, if you haven’t listed a secondary beneficiary, then these assets will enter your probate estate, which can involve great time and expense for your heirs.

Choose your beneficiaries carefully, and consider using a trust

If you listed a minor child as your secondary beneficiary, the entire amount of the asset will pass to them directly. Minors are often unprepared to manage these kinds of lump gifts, and may have been better served by the creation of a trust that would pay out these benefits in a more controlled manner. There is also the possibility that you wished for your ex-spouse to remain a beneficiary, with the assumption that the funds would be used to care for your children. These are all the sorts of changes that would need to be made with careful and detailed legal documents by experienced New York divorce and estate planning attorneys.

For assistance with a New York divorce or updates to your estate planning documents, contact the skilled and effective Hudson Valley estate planning and family law attorneys at Rusk, Wadlin, Heppner & Martuscello, LLP for a consultation, at 845-331-4100 (Kingston), or 845-236-4411 (Marlboro).

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