There are many consequences that a divorce has on your life, especially your financial circumstances. One aspect that individuals may not consider is how their divorce alters the contents of their estate plan. An estate planning attorney in Bloomington can help you determine what has changed since your divorce and how to effectively reflect these changes in your will, trust, and other estate planning documents.
Your ex-spouse may have certain legal powers that you no longer want them to have, or you may have lost significant assets that are still listed as part of your estate in the plan. To get the full benefits of an estate plan, you need to ensure that you review and update it to reflect your personal and financial changes in life.
Alterations to Consider in Your Estate Plan After a Divorce
People create estate plans to protect their loved ones, save them stress and money, and ensure their own personal care. An out-of-date estate plan will not carry these benefits. There are several items that you will want to review after a divorce to ensure that your estate plan continues to reflect your wishes:
Will Inheritance Rights
In Illinois, once you divorce, your will is automatically altered. Any legal powers or interest your ex-spouse had in the will is revoked. If you were to pass, the distribution of your estate would continue as if your spouse had passed before you. For some people, this limits the hassle of updating their estate plan after divorce.
However, it is not without consequences. If you have no alternate or contingent beneficiary, then the assets have no heir. This may result in the assets passing through probate and inheritance law or even becoming state property.
To avoid this, you can name alternate beneficiaries in advance, and you can also update your estate plan to have new beneficiaries. While state law removes a spouse from inheriting from your will, this revocation does not apply to all estate planning documents or financial and benefit accounts. It’s important to review other documents to determine who you want to inherit your assets.
Powers of Attorney
Powers of attorney are documents that give someone legal, financial, or medical decision-making authority if you become incapacitated. Many people choose their spouse for this. After a divorce, you may no longer want your ex-spouse in charge of these decisions. You may want to select another family member, friend, or professional you trust to uphold your interests.
Marital Assets
Your estate plan covers who inherits what in your entire estate. This likely included marital assets that are no longer yours to own since you lose approximately half your marital assets during the division of property. Although you still retain your separate assets, this may still mean that a significant portion of your assets are gone. This can result in confusion if you do not update the estate plan to reflect these changes, and it can even make the plan unenforceable.
Additionally, these financial changes in your life after a divorce may have changed how you want to provide for yourself and others financially. As a result, there may be other changes you want to make to your estate plan.
Revocable Trusts
You may have created both irrevocable and revocable trusts within your estate plan. If you have a revocable trust, you may want to alter the beneficiaries or trustee of that trust, as state law does not revoke those terms. If you made irrevocable trusts, it can be more difficult to update them. Typically, you need the approval of the court and all the trust’s beneficiaries. This may not be possible. It’s important to consider carefully when creating an irrevocable trust.
Children’s Inheritance Rights
It’s important that your children are provided for, especially if they are still young. If you pass assets through a will to your minor children, your ex-spouse is likely to have control over those assets until the children come of age. This was likely not a concern before a divorce, but you may want to update it now. By placing assets that you wish your children to inherit in a trust, you can name a trustee to oversee those assets.
FAQs
Q: Does Divorce Affect Estate Planning in Illinois?
A: Yes, divorce can affect your estate planning in Illinois. Divorce automatically revokes the power and assets given to a spouse in your will after divorce. If you still want your ex-spouse to recover any benefits, you will have to update your will to reflect that. Inversely, this automatic revocation does not apply to other estate planning tools, and you must manually remove your spouse from trusts or powers of attorney. Divorce also affects the assets you own, which can alter your estate plan.
Q: Should I Update My Will After My Divorce?
A: Yes, you should update your will after a divorce. You should update your will and estate plan about every three to five years or whenever life changes occur. Significant life changes could include:
- Marriage
- The addition or loss of family members
- Changes to tax or estate planning law
- Moving to a different state
- Gain or loss of assets
- Gain or loss of debts
You may also want to update your will and estate plan if your personal goals and wishes have changed.
Q: Is My Spouse Entitled to My Inheritance When We Get Divorced in Illinois?
A: No, a spouse is typically not entitled to your inheritance when you get divorced in Illinois. The property that is split between spouses in a divorce is only marital property in the state. Inheritance is considered separate or nonmarital property. Even if you obtained the inheritance during your marriage, any gifts, legacy, or descent property are considered separate. These include anything you exchanged for that inheritance.
If the inheritance is granted to both you and your spouse, it would not fit the definition of separate property.
Q: What Happens If I Don’t Update My Will?
A: If you do not update your will, it may become legally unenforceable. If it is enforceable, there are several issues that can occur from failing to update a will, including:
- If the beneficiary to an asset has passed before you, it may pass to the jurisdiction of the state.
- Individuals may have power of attorney for your affairs who you do not wish to.
- If your will is successfully contested, there is no prior version for the court to refer to, so the estate will follow succession laws.
Get the Full Benefits of Your Estate Planning
Contact Stange Law Firm to learn how we can help with your estate planning after a divorce and in any other circumstances.
