When divorce interrupts life, there’s a lot to be resolved, which can be overwhelming. Nonetheless, attorneys remind us not to overlook estate plans, whether they have been fully detailed or partially formed. Documents, named beneficiaries and appointed fiduciaries likely require consideration in the face of divorce.
Power of Attorney and Health Proxy
It’s common for spouses to list each other on the legal, financial and medical documents that make up our “in case of emergency” toolboxes. Even absent a full blown estate plan, many couples have made—and documented—”what if” decisions that likely need to be revisited during divorce. Hayley Purcell Sinkler of Obermayer Rebmann Maxwell & Hippel LLP offers this advice, based on laws in Pennsylvania:
A financial power of attorney…allows you to pick an agent to handle your financial affairs and property in the event you are unable to do so. Typically, your agent can act in any way as though you yourself were acting — write checks, file your taxes, even sell your house. Similarly, a medical power of attorney is a document that allows you to pick an agent to make health care related decisions on your behalf in the event you are unable to do so….It is likely that you…named your spouse as your agent on one or both of these documents. These documents should be revised at the outset of the divorce action. Pursuant to Pennsylvania Law, if you designate your spouse as your agent and thereafter a divorce complaint is filed, the designation is revoked by law. Put more simply — your spouse can no longer act as your agent.
To avoid legal complications later—and for your own peace of mind—it’s best to designate new agents, such as trusted friends or relations on financial and health proxies when divorce is underway. Attorneys explain that failure to do so can cause a lot of stress and even litigation down the road:
If no successor agent was named, or the person you chose when drafting these documents in now unable to act, it could result in the entire power of attorney being inoperable. If this happens and you become incapacitated, your loved ones would have to petition the court and litigate for guardianship in order to manage your health and finances. For their and your own peace of mind, it is better to make sure your power of attorney is up to date with individuals you trust to make these decisions for you.
Of course divorcing spouses also need to address a will and or trust mutually established in the past. It’s likely that assets have been designated to each other and decisions need to be reassessed. In addition to asset designations, fiduciary designations may also merit attention. Estate lawyers point out that wills and trusts:
Should be revised once grounds are established in a divorce. Pursuant to Pennsylvania law, once grounds are established in your divorce case, any portion of your will that leaves assets to your spouse, or names your spouse as a fiduciary (trustee or executor) will become ineffective even if the divorce has not yet been finalized. Your assets will then pass to whomever you have named as contingent beneficiaries. When reviewing your backup fiduciary or agent designations on wills or powers of attorney, make sure you are still comfortable with the individual you named. Unlike the designation of your spouse, these designations are not revoked as a matter of law. Do you still want your spouse’s mother or brother or friend in a position to make important decisions regarding your life and finances.
Whenever working with attorneys to revise or create an estate plan, it’s important to be thoughtful with the designation of a loved one, friend or professional to serve as the fiduciary. This person may be specifically referred to as an executor, trustee, or personal representative, depending on your circumstances and region. Regardless of the specifics of your estate plan, the fiduciaries you appoint have a legal responsibility to carry out your affairs, in accordance with the intentions set forth in your estate planning documents and the law. When representatives are designated, fiduciary bonds, alternatively referred to as estate bonds, can be required as a safeguard for the interests of the estate and beneficiaries. Learn more about estate bonds right here. At Colonial, a leading national provider of all types of fiduciary bonds, the steps to obtaining estate bonds and all other types of fiduciary bonds are easy: get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere—even the law office.
Choose and Obtain Estate and Fiduciary Bonds In Minutes Here.
Problems To Avoid
Legal experts remind us that unaddressed conflicts are frequently at the roots of messy and painful probate litigation. Perhaps especially on the heels of divorce, families will benefit from clear communication and the resolution of simmering problems. As Justia notes: “High-risk factors for probate litigation include sibling rivalry, second marriages, and dysfunctional families.” Even when done with the best of intentions and reasons, unexpected decisions can also trigger contests to the estate plan. Challenges to the validity of legal documents involved with wills and trusts, and lack of faith in the appointed fiduciary, such as the executor or trustee, can also stir trouble—even in “happy families.” Leave your family in the best possible shape by addressing these estate planning basics. Finally, estate lawyers remind us that careful planning also requires assembling all the account information and other details your family will ultimately need to settle your affairs. Creating a “letter of instruction,” can also be helpful. Though not a legal document, a letter of instruction (sometimes referred to as a letter of intent) gives your loved ones insights into your wishes and the decisions behind your legal documents.
Estate Law?
In addition to providing bonds directly to the general public, Colonial offers The Partnership Account® for Attorneys. This free business service provides user-friendly client management dashboards, enabling attorneys to easily obtain, coordinate, and e-file the court and fiduciary bonds clients need. See for yourself today: The Partnership Account® for Attorneys.
Colonial Surety is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed, and licensed for business everywhere in the USA. Our customers have awarded us a 4.8 Trustpilot score.
Whenever and wherever you need a bond, trust Colonial: www.colonialsurety.com