Divorce and Estate Planning in Minnesota
October 20, 2011 - by Eric Anderson
During the emotional turmoil accompanying a divorce, one of the last things on your mind is estate planning. However, it is advisable to review your entire estate plan during and after a divorce because the plan will almost certainly require some fine tuning and may no longer be desirable in some respects. Here are several issues to consider while reviewing your estate plan during and after a divorce.
Health Care Directives. Under Minnesota Law, your appointment of your spouse as your health care agent is automatically revoked upon the commencement of divorce proceedings, unless your health care directive states otherwise. Therefore, your alternative agent (if named) will become your primary agent and you should execute a new health care directive. If you are preparing to commence a divorce proceeding, but have not yet done so, and you do not want your spouse as your primary agent, you should revoke your current directive and execute a new one.
Power of Attorney. Like health care directives, your appointment of your spouse as your attorney-in-fact in a Power of Attorney, is automatically revoked upon the commencement of divorce proceedings. You should execute a new power of attorney with a new attorney-in-fact to ensure that your incapacity planning remains in place. Also, if you have not yet commenced divorce proceedings, but no longer want your spouse as your attorney-in-fact, you should revoke your current power of attorney and execute another. A power of attorney gives your agent broad access to your finances and it may not be desirable to have your soon-to-be ex-spouse as your agent.
Wills. Under Minnesota Law, upon divorce, your Will is applied as if your ex-spouse predeceased you (assuming you have not already updated your Will). Therefore, your property would bypass your ex-spouse and go straight to your contingent beneficiaries.
Beneficiary Designations. Minnesota Law also provides that divorce generally revokes any revocable beneficiary designations, such as those found in life insurance plans. However, you should review all accounts with beneficiary designations like life insurance and retirement accounts, and make the proper changes in order to avoid any confusion.
Trusts for Minors. Parents often set up contingent trusts in their Wills that put their property into trusts for the benefit of their minor children (if the children are under 18 when the parent dies). Divorced parents may not want their ex-spouse to have control of their property, even if it supposed to be for the benefit of the minor children. Therefore, it is advisable to set up these contingent trusts naming someone other than the ex-spouse to be the trustee. The trust money will still go to your kids, but having an independent trustee will ensure that your ex-spouse does not exhaust your trust funds for his/her share of the expenses for the minor children.
Guardians for Minors. Parents often ask if they can designate someone other than their ex-spouse to be the guardian of their minor child if they die before the child reaches 18 years old. The answer is generally no. The child's parent (your ex-spouse) will always have priority to be the child's guardian unless they are determined by a court to be unfit to parent the child. What you can do is designate someone to be guardian of the child if both you and your ex-spouse die while the child is still a minor.
Note: The above-article is by no means a complete list of estate planning issues that accompany a divorce. It is intended to get you thinking about issues you will want to consider after a divorce. Consult an estate planning attorney if you have gone through a divorce and are concerned about the effects the divorce will have on your estate plan.