December 20, 2016
A lot of things end at the time of divorce, not just a marriage.
If you’ve been smart and had an estate plan prepared while you’re married, you now need to be proactive again. Upon divorce, many documents cease to have their same effect. That can often be a good thing, but it can leave holes in your estate plan if you’re not aware of the changes.
For your power of attorney, if you had your spouse listed as your Power of Attorney Agent, then upon the divorce becoming finalized, the power of attorney ceases to have effect.
“Unless otherwise expressly provided by the durable power of attorney, if, after execution of a durable power of attorney, the principal is divorced from a person who has been appointed the principal’s attorney in fact or agent or the principal’s marriage to a person who has been appointed the principal’s attorney in fact or agent is annulled, the powers of the attorney in fact or agent granted to the principal’s former spouse terminate on the date the divorce or annulment of marriage is granted by a court.” – Texas Estates Code, Section 751.053
This means the Agent (your former spouse) can no longer use the Power of Attorney to sign contracts or financial documents. However, if they have a copy of the Power of Attorney it may not stop them from using it for illegal gains. Therefore, if you’ve given a copy of the Power of Attorney to a bank or institution in the past or your spouse has used it in the past, make sure to send that bank or institution notice that you’ve revoked that former spouse’s status. Just to keep them honest.
For your Last Will and Testament, if you had everything in your estate going to your spouse upon your death, that changes too with your divorce. Now, the Court will consider your spouse to have predeceased (died before you) and it will go to the next person listed in your Will. A major problem that we often encounter here is that they didn’t list an alternative beneficiary, so instead of going to a specific person you may have in mind, it instead goes to all your heirs at law, whomever they may be.
Also, with your Last Will and Testament, it’s very common to name your spouse as your Executor of your Will and Estate. If you’re now divorced, your spouse loses that position too, meaning you need to make sure you have an alternate Executor named or amend.
It’s a good idea to revise your Will and Estate Plan immediately after the divorce is finalized. Your family has changed, your situation has changed, and your assets and estate have probably changed too (hopefully for the better, but more likely for the worst) so your Estate Plan needs to take these new changes into consideration.