by Patricia De Fonte
Why do I need an estate planning attorney?
During a divorce, what can you do to ensure that the person you no longer love or trust has no authority over your health care decisions or your assets? How do you ensure that your assets pass to your children and loved ones without your spouse’s interference? Do you have a team of terrific professionals to help you through this difficult time?
You must immediately create a new durable power of attorney and advance health care directive. Exclude your spouse from any decision-making authority over you. Create a new revocable trust for the distribution of your assets. This should exclude your soon-to-be-ex from control and inheritance. You may not be able to transfer marital assets to that trust until your divorce is final. However, if you have signed documents in place, it could mean that your assets are protected should the unexpected happen.
Incapacity planning is critical.
All of my clients know the story of Khloe Kardashian and Lamar Odom. Their divorce had not yet been finalized when he was temporarily incapacitated and in a coma. It appears that Khloe was still his health care proxy, and likely his agent under a durable power of attorney and the co-trustee of their marital trust. Imagine your soon-to-be-ex in charge of deciding whether you live or die and contemplating which outcome benefits them most.
Create a new revocable trust.
There is nothing stopping you from creating a new revocable trust, and this is urgent if you have young children. While you cannot transfer marital assets to an individual trust without a court order, you might be able to use your separate property assets to purchase a life insurance policy to fund this trust for the benefit of your children. You can also list all of the assets you believe you will obtain in the divorce on the schedules of the trust, and should you pass away before or after the divorce is final but before you are able to transfer those assets to the trust, then a good estate planning attorney can petition the court on your behalf.
The Importance of Independent Counsel.
The attorney preparing your individual trust should NOT be the same attorney preparing your soon-to-be ex-spouse’s individual trust. I am aware that some attorneys do this (typically when they drafted the original marital trust). They ask their clients to sign conflict waivers. However, an estate planning attorney should not simply draft a document. An estate planning attorney is a counselor who should advocate for their client.
Real Estate: Severing Joint Tenancies, Working with Realtors, Mortgage Considerations:
- If you hold title to real estate as joint tenants, if you die before your divorce is finalized then your soon-to-be ex may inherit your half of the property. Speak with your divorce lawyer about the possibility of “severing” a joint tenancy. Talk to an estate planning attorney about creating an estate plan that will keep your share of the property out of your soon-to-be your ex-spouse’s hands.
- If you anticipate that the real estate will be sold as part of the divorce decree, then it is critical to work with a realtor who understands the ethics and special circumstances of working with divorcing clients. Work with a realtor who has the experience and training to help you deal with a spouse who is trying to sabotage a sale.
- If you think you will be in the market for a new home, it is critical to work with a mortgage specialist. This specialist should be well-versed in working with divorcing clients and what can be a non-traditional asset structure during a protracted divorce. A good broker can assist you in becoming prequalified and help you determine what you can afford.
You are about to be single, which means you will be living in a one-salary home. It is critical to investigate whether disability insurance is affordable and practical for you. Also, consider whether Long Term Care Insurance is a prudent or necessary investment. It is likely that you hold your auto, home/renters, and umbrella policies with your spouse. It is time to create a new relationship with an insurance agent.
Taking Charge of Finances and Understanding Taxes.
For many divorcing people, this may be the first time that they have to manage their own assets and consider their own taxes. It is vital that a divorcing client work with their own financial advisor, or perhaps a Certified Divorce Financial Advisor (CDFA). A financial advisor is critical for understanding the value and tax implications of each asset. They can assist in budgeting, and preparing to make or receive alimony payments.
Mediation is always an option.
Couples often think that mediation is not an option if they have already hired lawyers. A mediator’s job is to make sure there is open and clear communication between parties. The mediator also ensures that bad communication habits don’t creep into the conversation. They keep emotions low so that you can think through the issues and properly problem-solve. Contact Alice Shikina if you want to learn more about mediation.
If you are contemplating divorce and have not had a chance to think about protecting yourself and your assets from your spouse prior to the divorce being final, please contact Patricia De Fonte. I have a strong professional network that can help with all of these issues and more. My network is your network.