The Crossroads of Divorce and Estate Planning
A new case from the Tenth Circuit Court of Appeals reminds us again of the impact of divorce on an estate plan. In the case of McAnulty v. Standard Insurance Company et al., a dispute arose over a life insurance policy on the life of Steven McAnulty. Steven was married twice, first to Elizabeth McAnulty. A marriage that ended in divorce. At the time of his death he was married to Melanie McAnulty. The life insurance policy named Melanie as the beneficiary. But the divorce decree required Steven to maintain a $100,000 life-insurance policy with Elizabeth as sole beneficiary until his maintenance obligations to her under the divorce decree were terminated. Elizabeth sued seeking $100,000 of the insurance proceeds. The Federal District Court in Colorado dismissed her complaint saying there was no basis for the lawsuit. Elizabeth appealed that decision. The Tenth Circuit agreed with Elizabeth finding that she did have a claim and sent the case back to the District Court for further proceedings. We will have to wait and see what the District Court decides, but the lesson is clear. Whether it’s naming a beneficiary on a life insurance policy, a will, or some other legal document, consideration should be given to obligations under the divorce decree.
After a divorce it’s important to update your will, trust, financial powers of attorney, health care power of attorney, and all other estate planning documents. You should also update all beneficiary designations on life insurance policies, retirement accounts, and any other transfer on death account. Deeds and other title documents that provide for rights of survivorship should also be reviewed and updated accordingly. In making these changes, your estate planning attorney and other advisors should be given a copy of any prior decree so that it’s impact can be considered in making planning decisions.
If you have been through a divorce, please reach out to a qualified estate planning attorney today to make sure your family doesn’t end up in court with your ex after your gone.
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.