Why Every Divorce Lawyer Should have an Estate Planning Attorney on Speed Dial
Not everyone realizes that, in Florida, obtaining a divorce results in some automatic changes to your previously-signed estate planning documents. Furthermore, certain Florida estate planning documents are impacted while a divorce is pending (i.e. before a final divorce decree is entered)!
If you prefer to not read the nitty-gritty details below, here is the main takeaway:
Don't wait until your divorce is pending or finalized to redo or amend your estate planning documents. If you are getting ready to file for divorce in Florida, you also need to speak with estate planning attorney to redo all of your important incapacity and estate planning documents, such as your Revocable Trust, Last Will and Testament, Durable Power of Attorney, Health Care Surrogate Designation and Living Will.
How a Pending Divorce or Final Divorce Impacts Important Estate Planning Documents in Florida
Lets discuss the impact of divorce on the following incapacity planning and estate planning documents in Florida:
Revocable Living Trust
Per Florida Statute 736.1105, upon a dissolution of marriage (divorce), the revocable trust shall be construed as if the spouse had died at the time the marriage was dissolved or declared invalid by court order, unless the judge's order expressly provides otherwise, if the specific intention that the spouse remain a beneficiary is stated in the revocable trust document, or if the revocable living trust was executed after the divorce proceeding was finalized.
In other words, there is no impact to the revocable trust while a divorce case is pending.
Last Will & Testament
Per Florida Statute 732.507(2), any provision in a Last Will and Testament that impacts the testator's (testator is someone who creates a Will) spouse is void upon the final dissolution of the marriage. When the divorce is finalized, the Will is construed as if the spouse died at the time of the dissolution of the marriage. An exception to this rule occurs if the Last Will specifically indicated the testator's intention for their spouse to remain in their stated roles (e.g. as personal representative or beneficiary) even in the case of divorce. Another exception is if the judge orders for the ex-spouse to remain in the Will.
As with the Trust, there is no impact to the Last Will and Testament while a divorce / dissolution of marriage matter is pending in the family court system.
Durable Power of Attorney
Per Florida Statute 709.2109(2)(b), an agent's authority terminates when: an action is filed for the dissolution or annulment of their marriage, or for their legal separation, unless the power of attorney says otherwise.
In other words, the divorce does NOT need to be finalized for a Power of Attorney to be impacted. It is with the initial divorce filing, a spouse can no longer serve as agent / attorney-in-fact. This is designed to try to prevent a soon-to-be former spouse from abusing their access to the other spouse's financial accounts. However, banks and financial institutions may not know about the pending divorce and can easily mistakenly allow a POA to remove assets from accounts. This is a significant reason why someone even considering divorce in Florida should be meeting with an estate planning / elder law attorney to re-do / correct / amend estate planning documents.
The exception to this is if the Power of Attorney document says otherwise. For example, "My spouse Jessie Jones shall serve as my agent under this power of attorney, and shall continue to serve even if either of us commence an dissolution or divorce of our marriage." In this example, the POA specifically contemplates a divorce and explains that the principals intent is that their spouse continue to serve even if they dissolve the marriage in the future.
This is pertinent in cases where spouses are getting a divorce but remain close friends. Sometimes spouses get divorced strategically as part of Medicaid planning.
Living Will | Health Care Surrogate Designation
Per Florida Statute 765.104(2), an order of dissolution of marriage will result in the principal revoking the designation of their former spouse as a surrogate (unless the order indicates otherwise). So, in this case, for a health care surrogate designation or surrogate in a living will, a spouse's authority to make these important health-care decisions terminates with the final order (or when the divorce is complete) but not while the divorce proceedings are pending.
Impact of Divorce Proceedings on Beneficiary Designations on Financial Accounts and Joint Ownership of Assets in Florida
In addition to the impact a divorce has on Florida estate planning documents, there is also an impact on jointly held assets and special assets that have beneficiary designations:
Joint Ownership of Real Estate in Florida After Divorce
Married couple usually own real estate as Tenancy by the Entireties. When their divorced is finalized, their ownership interest will automatically turn into jointly owning the property as Tenants-in-Common.
Life Insurance, IRA and Annuity Beneficiary Designations After Divorce
A spouse's interest as a "pay-on-death" or "transfer-on-death" beneficiary is terminated upon the divorce becoming finalized (there are some exceptions for ERISA plans).
Amend Your Florida Estate Planning Documents and Accounts Before Or Shortly After a Divorce is Commenced In Florida
Hopefully, you are now convinced that considering changing or completely overhauling your estate plan is important to do before a divorce is commenced. Once completed, all 3rd parties need to be notified that documents they have in their possession have changed. For example, you need to provide the new health care surrogate and living will to your doctors. Provide the new Durable Power of Attorney to different financial institutions (so that they honor them).
This prevents a future ex-spouse from abusing what power they still retain while a divorce is pending.
Also consider that sometimes a spouse might pass way while a divorce is pending.
If one spouse were to pass away while a divorce proceeding is pending, they may not be able to completely disinherit their spouse (due to the elective share). But their share can at least be reduced from what may have started out as 100% inheritance to a 30% inheritance.
Finally, consider that if you do not redo your estate planning and beneficiary designations, after a divorce has been finalized, you may have unwittingly created a situation where assets will have to go through a probate proceeding. All of this can be avoided with proper planning - ideally when the decision to first get a divorce has been made.