Divorce, death, and disability are things most folks don’t want to speak or thing about. When we jump out of bed in the morning, we are energized to tackle things other than these issues. Yet most of us want order and predictability in our lives — and that’s what divorce coupled with estate, financial, and end-of-life planning give us.
A divorce ends a marriage that is no longer viable, freeing the parties to regain more control over their future lives. Many of us will suffer a disability during our lifetime, and no one escapes death. Through estate, financial, and end-of-life planning, we also gain control over how our assets are treated when we become disabled and what happens to our property and our loved ones when we step off this mortal coil.
Estate Planning Before or During Your Divorce
Through a Last Will, you can name whomever you want to get your assets after you die (your beneficiaries). Legal title to those assets goes to your Estate after your death. You can nominate an Executor (male) or Executrix (female) to be responsible for your Estate’s administration. When approved by the Probate Court, they become your personal representative. Without a Will, your assets go to your next of kin (if you’re married, that would be your spouse or your children).
Before your divorce, your Will could name someone other than your spouse to be responsible for your Estate if you so direct. Yet under New Jersey law, you can’t disinherit a spouse unless you are already divorced at the time of your death. Your surviving but not-yet-divorced spouse would be entitled to a third of your “augmented Estate” regardless of your Will’s contents to the contrary. An augmented Estate is, generally, the value of your Estate, less funeral costs, administration expenses, and any bills or debts your Estate must pay.
Your spouse wouldn’t be entitled to this elective share if, at the time of your death, you and your spouse are living apart in separate homes or you and your surviving spouse stopped living together as a married couple, according to a New Jersey statute.
Estate planning is more than just Wills. You can also create documents called Powers of Attorney, Living Trusts, and Living Wills. They allow others to make important decisions for you if you’re unwilling or unable to make them yourself. These documents typically cover medical and financial issues if you’re incapacitated. If you no longer want your spouse to make these choices for you, then you can name someone else in these documents.
Estate Planning After Your Divorce
If you live with your spouse, create a Will disinheriting them, and then pass away, the law constructively inserts into your Will that they will get a third of your estate. After your divorce, if your Will lists your spouse as a beneficiary, the law constructively erases them from the document.
A divorce decree automatically revokes your ex-spouse’s rights to the Estate. If your Will leaves assets to your spouse and or nominates them to be in charge of your estate, and you didn’t change the Will after your divorce – even if you should have done so – then the legal eraser goes into action once again. Your ex-spouse won’t inherit any of your property or serve as Executor/Executrix of your estate, voiding those parts of your Will. An exception to this rule would be if, as part of the Settlement Agreement and the Court’s Order finalizing your divorce, they remain a beneficiary in your Will, or you decide to republish your Will post-divorce. In either case, your former spouse may – with your consent – inherit property from you, the divorce judgment notwithstanding.
A major issue we recently confronted is what happens when an employee names his/her spouse as a 401k beneficiary in 2010 and the parties divorce in 2022, agreeing to split the 401k proceeds under a Settlement Agreement incorporated into a Final Judgment of Divorce? Our client died post-divorce but pre-distribution of the 401k. His ex-wife received her ½ share of the fund, and then received his ½ share as well from the 401k Administration, because he had not changed his beneficiary designation!! We had to litigate the issue in the Family Court to claw back the Estate’s share of the 401k proceeds. We created an enforceable settlement between the client’s Estate and his ex-wife. She did better than the Estate in the transaction, but the Estate was able to recover significant funds. The takeaway: immediately upon divorce, change your Will, Power of Attorney, Living Trust, Living Will (for end-of-life decisions), and 401k (and any equivalent) beneficiary designations. Things could get very messy and expensive for either party’s Estate and the surviving spouse if you don’t.
As part of the divorce Settlement Agreement, the two of you may agree on how to support your children if you unexpectedly pass away. You can also mandate life insurance from each party to the child or children. Your children could be named as beneficiaries if they’re mature enough, aren’t so disabled they’re incompetent to handle money, or suffer from substance abuse. If you fear unfettered access to money will just feed their addiction, then you may, during your lifetime, create a Trust in which the Trustee (potentially your ex) disburses funds or buys things your kids need – and do so under language setting the standards for distribution, timing, duration of the Trust, who takes upon the Trust’s demise, etc., including provisions for back-up Trustees as needed.
Creating a Living Will also is a great idea. If you become incapacitated, medical decisions are usually made by your next of kin. They may be your parents or your children (if you have them and they’re old enough). If you fear they may disagree on what should be done in a medical emergency, you may decide to name one individual. You have to sit down with the Living Will Surrogate Decision-Maker and explain what you want done if you are in a coma and can’t participate meaningfully (or at all) in your healthcare management, up to and including life-and-death decisions.
You’ll still get bills, have debts, and need to pay your rent or mortgage while physically or mentally unable to pay them. If you’re married, your spouse would typically pay these bills. After your divorce, through a financial Power of Attorney, you can name a trusted agent who has the power to access your assets and pay your obligations. After you recover, you won’t have to worry about your electricity being shut off or getting evicted for non-payment of rent.
You may revoke a Living Will or Power of Attorney designations, choosing another agent if that is your wish.
Kingston Law Group: Get the Help You Need from the Lawyers You Trust
If you have any questions about divorce and the legal and financial protections related to it, call the Central Jersey law offices of the Kingston Law Group at 609-683-7400, or contact us online for a near-term reduced fee initial consultation. We will listen to your facts, explain how the law applies to you, and strategize to obtain the best outcomes. We will make referrals to specialists in the fields of Estate Planning, Elderlaw, Financial Planning, and all related fields. We will present you with optimal choices to protect your legal rights and interests and those of your child(ren). Call or write us today. You will be glad you did.
