If you’re in the midst of a divorce, it’s wise to review your current estate plan (or lack thereof), to understand how you need to prepare. In South Carolina, divorce proceedings often take well over a year to complete due to the requirement that parties without grounds for divorce live separate and apart for more than 12 months. While divorce is awful, death is certainly worse and many of our clients aren’t comfortable having their estate plan in limbo pending their divorce.
If you’re in this situation, here are a few tips and things you need to know:
- Pre-Nuptial Agreements: Make sure your divorce attorney has a copy of your prenuptial agreement and advises you on how it could come in to play during the pendency of a divorce. In most cases, a prenuptial agreement often limits (if not eliminates) an obligation to provide for the other upon death. That being said, a prenup won’t override an existing estate plan that was executed after the marriage when all was well in the relationship. As a rule of thumb, do NOT make the mistake of relying on a prenuptial agreement or South Carolina law to “auto-correct” an estate plan.
- Trusts / Wills: If there is a trust/will in place it’s important to review the document to recall specifically what it provides for the soon to be ex-spouse. Many mistakenly assume that during a period of separation, any bequests to the spouse will become null and void. This simply isn’t the case. In fact, there is case law in South Carolina which only terminates rights between spouses during a divorce if they have a fully executed and approved settlement agreement in place which addresses this issue. If this is important to you, make sure your attorney includes that language as soon as possible in your proceedings.
- Power of Attorney Documents: While there are laws preventing you from disinheriting someone you are still married to (called the “elective share”), there is no requirement that you keep them as your power of attorney. Most of the time, each spouse has listed the other as an agent in his or her powers of attorney to make decisions on critical property and health care. If you wouldn’t want you're soon to be ex making these decisions, you need to have your attorney update your documents. If you don’t have these documents in place, it’s time to get them in place to make it clear who is in charge of your decisions if you’re unable to make them on your own.
Take the time during the pendency of your divorce to recall and review all accounts that have a POD (Payable on Death) or beneficiary designation. It’s quite common that spouses name one another for everything from insurance proceeds to annuity plans. Talk to your attorney before making any changes as certain accounts are likely still a part of the marital assets. Once you’re given approval on what accounts you can control, it’s time to decide who should replace your spouse on these documents and accounts and how that falls in line with your overall estate plan. If your divorce attorney isn’t a qualified estate planner, now would be a good time to get a referral.
Unfortunately, there are certain steps that can only be taken once the divorce is finalized. As mentioned, in South Carolina and in many other states, it’s rather difficult to disinherit your spouse entirely while still married. However, reviewing the items mentioned above and getting a head start on planning for your new life as a single individual will keep you moving in the right direction and make sure there is not an unintended windfall for a soon to be ex-spouse.