Unfortunately, the rate of divorce for those over the age of 50 constitutes roughly 36-40% of all divorces. These divorces involve those couples who have accumulated some wealth and typically have an estate plan. How does a divorce affect these plans, such as a Will, Power of Attorney or beneficiary arrangements? The answer is often dependent on where you are in the separation process.

When separating from a spouse, there is usually a time before an action for divorce is filed with the local court. During this initial separation phase, there may be a breakdown in the role as a married couple, but the law does not change any of the estate planning documents or agreements for distribution of your assets at death since no divorce proceeding has been initiated. This is considered one of the riskier periods in the divorce process since an untimely death by an older adult could result in the passing of wealth to a soon-to-be ex-spouse with no legal recourse to undo the transfer.

Once the divorce proceeding has begun, that process can affect the legal arrangements you have made with your spouse to pass on wealth at your passing. It can also affect the naming of agents in the Power of Attorney to represent you during a period of incapacity. Here is a breakdown of how some of the common estate planning documents and beneficiary provisions are affected by the divorce process:

• The Last Will & Testament – The terms of the Will are not affected by the initiation of the divorce process. Only upon the entry of a divorce decree or the death of one spouse after the grounds of divorce have been established are the distribution provisions in favor of the spouse made ineffective. However, this does not alter the spouse’s role as your executor. Therefore, it is prudent to change the terms of your Will soon after you realize that a divorce is inevitable.
• Financial Power of Attorney – If you named your spouse as your agent under a Financial Power of Attorney, the filing of a divorce action would render the naming of the spouse as ineffective. While the law in Pennsylvania may make that provision ineffective, financial institutions are unlikely to be aware of that law and may require a court order before they honor a successor agent. Thus, it is prudent to update the Financial Power of Attorney rather than rely on this statutory law.
• Health Care Power of Attorney – The Healthcare Power of Attorney or Advance Directive is not statutorily affected by a divorce. If you fail to change this document, your ex-spouse can still make medical decisions for you if you are incapacitated and need a healthcare representative. It is advised that older adults in the process of divorce change this document as soon as possible.
• Beneficiary Designations – Life insurance policies, annuities and certain retirement accounts have beneficiary designations that operate independently from a Will. Only the entry of a divorce decree or the death of one spouse after the grounds of divorce have been established will make a beneficiary designation naming a spouse ineffective. It is prudent practice to change these soon after initiation of the divorce, with the understanding that a divorce settlement may require that your ex-spouse be named as a beneficiary. Keep in mind that employee-sponsored retirement plans (i.e., 401k) are affected by Federal law known as ERISA and in most cases, a spouse cannot be removed as a beneficiary from these plans without a divorce decree.
• Jointly Owned Property – Jointly owned real estate, brokerage accounts, and bank accounts pass to the surviving joint owner when one spouse passes. There is no statutory modification of these assets once a divorce proceeding is initiated. Typically, these accounts are altered at the time the marital settlement agreement is reached. If one spouse dies prior to this agreement, the other spouse becomes the owner of jointly owned assets. However, the settlement agreement in the divorce, negotiated with the estate of the deceased spouse, could affect the ultimate distribution of assets.

Another matter to keep in mind as you proceed to change your estate plan is the conflict of interest your prior attorney will likely have. Attorneys who represent a husband and wife as a joint client cannot ethically agree to represent one of the spouses if a divorce is contemplated. You will need to seek another attorney to update your estate plan going forward.

If you are facing a divorce in the future, altering your estate planning documents along with beneficiary arrangements is generally considered a prudent decision.

Matthew J. Parker, Esquire is an attorney at the law firm of Marshall, Parker & Weber, LLC with offices in Williamsport, Jersey Shore, and Plains. For more information visit www.paelderlaw.com or call 1-800-401-4552.