Divorce can be a complicated process. One often overlooked aspect of divorce planning is to update your power of attorney. Choosing to update your power of attorney is key to making sure that your legal and financial interests remain protected.
Understanding Power of Attorney
A power of attorney designation is typically managed by a document that grants the authority for a chosen person to act on your behalf, such as in medical or financial matters, when you cannot. Spouses often hold power of attorney for each other. During divorce planning, you need to consider who should hold this title and authority to avoid potential conflicts.
Impact of Divorce on Power of Attorney
Divorce impacts many legal documents, including power of attorney. Typically, the power of attorney for a spouse becomes invalid upon divorce. However, during the divorce process, the existing power of attorney remains effective unless explicitly revoked, which can lead to complications.
Reasons to Update Your Power of Attorney
Planning a divorce definitively involves updating your power of attorney. Doing this provides you with several benefits and it’s a key part of just about any divorce plan. A lawyer who’s experienced in this type of legal proceeding can work with you to make sure that your intentions are honored when dealing with estate planning and divorce.
Protection of Interests
Updating your power of attorney helps to protect your interests against unexpected issues. Doing so also helps to make sure that your current and future needs are being met.
Avoiding Conflicts
Preventing potential conflicts of interest by assigning a neutral party as your power of attorney is important. This may very well reduce the risk of legal disputes arising due to financial or medical decisions being made. Selecting a trustworthy agent often helps to maintain your peace of mind.
Legal Requirements
Some states require updates to power of attorney upon filing for divorce. Maintaining compliance with these laws is essential to avoid any legal complications down the road.
Steps to Update Your Power of Attorney
A few steps need to be taken to update your power of attorney. Following each step is key to knowing the proper way to get power of attorney for a spouse removed and assigned to another.
Here are the steps that are required to follow for revocable trust and divorce:
Revoke the Existing Power of Attorney
You will need to sign a revocation document and inform your spouse and any relevant institutions. Be sure to get a written acknowledgment of receipt.
Choose a New Agent
Select someone trustworthy who understands and acknowledges your wishes and will most likely act in your best interest. Consider someone with the necessary skills and knowledge with a living trust and divorce.
Consult a Lawyer
Professional advice is critical to making sure the new power of attorney is legally sound and comprehensive. A lawyer can also help address any state-specific legal nuances for divorce estate planning.
Notify Relevant Parties
Banks, healthcare providers, and other institutions should be informed of the changes made. Keeping all parties involved informed helps to avoid confusion once the official power of attorney is needed.
How Divorce Can Affect Your Estate Plans
Planning a divorce may impact your estate plans in a variety of ways. Keeping a few aspects in mind is particularly important to avoid any potential issues that may arise.
Wills
After a divorce becomes final, be sure to also update your will. A will which names an ex-spouse as a beneficiary may very well lead to legal challenges. Clarifying your wishes by having a new will drafted can help to avoid potential disputes.
Trusts
Review and consider amending your revocable trust. A divorce may not automatically remove your ex-spouse as a trustee or beneficiary. This action can also protect your assets from unwanted claims.
Non-Probate Transfers
Beneficiaries of retirement accounts, life insurance policies, and other non-probate transfers should be updated. Understanding your state’s laws regarding these changes is crucial to prevent complications.
Power of Attorney
A divorce revokes any power of attorney which has been granted to a spouse. Be sure to update this document to avoid complications and be sure to clarify or specify if your power of attorney can represent you in court or sign divorce documents.
Importance of Legal Counsel
A lawyer who specializes in divorce and estate planning can help protect your interests. These professionals understand how to plan for a divorce, and they can help you avoid costly mistakes from being made. Divorce planning with an experienced legal team is well worth the investment.