Question: I am recently divorced in Illinois and wondering how my estate plan documents need to be modified as I no longer wish to provide for my spouse.
Answer: Estate planning is a common concern for recently divorced individuals. As with other life events, estate plans must be reviewed following a couple’s divorce. A review of your estate plan documents is necessary not only in the common situation where you wish to remove your spouse as a beneficiary but also in the less common situation where you wish for your spouse to remain a beneficiary.
The Illinois Probate Code automatically revokes bequests in a Will from a testator to a former spouse. Illinois law similarly revokes bequests in a revocable trust to the spouse of the trust’s creator. Appointments of spouses as Executors and Trustees of revocable trusts are also nullified by Illinois law. Illinois law does not address irrevocable trusts so a gift to a former spouse in a trust which cannot be revoked by the trust’s creator will not automatically be revoked. Appointments of a former spouse as agent under a Health Care or Property Power of Attorney are also nullified under Illinois law. The law does not revoke any gifts of property or fiduciary appointments made after the dissolution of marriage.
Despite the mandate of the law, if you are choosing to disinherit your former spouse, it is recommended that you update your estate plan and remove your spouse as a beneficiary of your Will and revocable trust. You should also expressly remove your spouse as an Executor and as a Trustee and as agent under your Powers of Attorney. New beneficiaries and new fiduciaries should be inserted in place of your former spouse.
In some cases, you may still want your spouse to serve as your Executor and/or Trustee. This situation sometimes arises where you and your former spouse have minor children who will be the ultimate beneficiaries of your estate. In this case, you should consider implementing minor amendments to your documents reaffirming the intention for your spouse to continue to serve as a fiduciary. In the rare circumstance where you also wish for your spouse to remain a beneficiary of your estate, an amendment clarifying your intentions should be adopted.
Challenges arise with respect to irrevocable trusts where the Illinois Probate Code does not automatically revoke bequests to spouses nor appointments of former spouses as Trustees. Trusts need to be thoroughly reviewed to address how to alter the arrangement. Although irrevocable, many trusts provide a third party with the flexibility to modify the provisions of the Trust Agreement to account for changed circumstances which may provide you with a means of removing your spouse as a beneficiary and fiduciary.
Illinois law also does not automatically revoke life insurance nor retirement plan beneficiary designations. As these assets typically pass without regard for what a Will or trust provides, you should modify your beneficiary designations to provide for the passing of these assets to your intended beneficiaries.
Regardless of your intentions, a review and update of all of your estate plan documents is recommended following your divorce.
The Tax Corner addresses various tax, estate, asset protection and other business matters. Should you have any questions regarding the subject matter or if you have questions you want answered, you may contact Bruce at (312) 648-2300 or send an e-mail to firstname.lastname@example.org.