Life Changes – Divorce and Estate Planning
Posted November 1, 2021
In 2018, country music singer Thomas Rhett had another hit when he sang “ain’t it funny how life changes, you wake up, ain’t nothing the same.” In the song, aptly titled “Life Changes,” Rhett focuses on joyous life changing events, such as marriage and parenthood. While there is a country music song for almost every major life event, not all are as festive as those highlighted by Rhett.
Approximately fifty years earlier, another country music star, Tammy Wynette, sang D-I-V-O-R-C-E, which reached number one on the Billboard Hot Country Singles charts in 1968. Divorce influences nearly every aspect of a person’s life, both financially and emotionally. Unfortunately, the impact of a divorce can be the most life changing event a person ever faces.
In New Jersey, a divorce is initiated in the Superior Court with the filing of a Divorce Complaint. The time it will take from the filing of the Complaint until a Final Judgment of Divorce is entered by the Court will vary in every case depending on countless factors. Some issues that will influence the length of divorce proceedings include the ability of the parties to amicably negotiate and agree to a resolution, the complexity of the case, whether there are issues related to custody and parenting time, the financial resources, or lack thereof, of the parties, and even the Court calendar.
Once the Final Judgment of Divorce is entered, you should review your Will and any Powers of Attorney you may have along with any insurance policy, retirement account and other financial account in your name. Modifications may be necessary based on your “life changes.”
Your Will identifies your beneficiaries and designates your executor. Ordinarily, your spouse is designated as the executor and is the beneficiary of most, if not all, of your estate. As New Jersey law revokes spousal designations after a divorce, if your Will is left unchanged, your assets are disbursed as if your spouse was never in the Will and such spouse is also removed as executor. However, you do not want to rely on that law to ensure that your former spouse does not receive any or all your property. To ensure this, you must revoke your current Will and execute a new Will identifying those who you wish to inherit your estate and the person you wish to designate as your executor. If you have minor children, you could also address guardianship of your children in the event of your death, keeping in mind, however, that unless your spouse is deemed unfit, he or she will likely receive custody of any children of your marriage.
Additionally, you will need to review the beneficiary designations for your insurance policies, retirement accounts, 401(k)’s, annuities and any other financial accounts you may have. Certain private retirement and health plans require that the Plan Administrator pay the beneficiary named in the beneficiary designation section, regardless of state law or what may be stated in your Marital Settlement Agreement. If you fail to remove your ex-spouse as the beneficiary, payments may be delayed while the beneficiary designation is challenged. As a result, you must be certain to contact all of your financial institutions immediately after you receive your Final Judgment of Divorce and sign new beneficiary designations that effectuate your wishes.
Finally, if you have executed any Powers of Attorney, for either medical or financial reasons, and have designated your spouse as your fiduciary, you also need to revoke those documents and execute new ones that reflect your current intentions.
If your life has changed for some reason, including divorce, but also for those happy moments, such as the birth of a child or the purchase of a home, it is important to reevaluate your estate plan to accurately reflect your current situation. If you have any questions regarding this blog, or divorce and/or estate planning, please feel free to contact Brian P. Budic or Robert L. Swartz.
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