Q. My husband and I are finishing up creating our divorce agreement. Years ago, we worked with an estate planner and did a detailed plan, made wills and trusts for our children’s benefits which I believe come to life through our wills and signed the papers for health care power of attorney. We also each took out life insurance policies and named the other as beneficiaries.
I heard that all of these documents will be invalid once we are divorced. We don’t really want to have to start over. Is it true we can’t use these documents anymore once we are divorced? Our situation is very amicable and we still want to nominate each other as trustee and beneficiary.
If we can’t do this any longer, can we nominate our oldest son? He is 17 and very responsible.
A. You need to think hard about a few things here: (1) As amicable as you are feeling today, down the road when you are each in new relationships – do you really still want your Ex to make your medical decisions if you can’t? (2) Do you really trust a 17 year old to properly invest life insurance proceeds, understand and manage a trust, and care for his younger siblings? If you answer yes to question 2, do you want to take away his ability to go off to college and do things college kids do if you and your soon to be Ex get hit by a bus leaving the court house after your divorce hearing? I am going to assume your answer to both things are no.
Under Massachusetts law, “Except as provided by the express terms of a governing instrument, a court order, or a contract relating to the division of the marital estate made between the divorced individuals before or after the marriage, divorce, or annulment, the divorce or annulment of a marriage: (1) revokes any revocable (i) disposition or appointment of property made by a divorced individual to the individual’s former spouse in a governing instrument and any disposition or appointment created by law or in a governing instrument to a relative of the divorced individual’s former spouse…” [See M.G.L.c. 190B, section 2-804(b)]. Thus, if your divorce agreement does not specify that you will each remain beneficiaries of the other’s life insurance policies or serve as trustee of the trust created under the will, presumably to benefit your children, you would have a problem. The quick and easy fix is to include language in your divorce agreement which affirms your respective beneficial interest in life insurance and role as trustee of trusts – at least until your children are emancipated then money and oversight can go to them directly if you like. Do check with your insurance company to see if they require posts-divorce execution of a confirmation of beneficial interest – some do, some don’t.
I do urge you to appoint new healthcare proxies – these are simple forms to update and will avoid awkward situations later on.