Divorces can be complex, emotional, and overwhelming. When thinking about a divorce, there are many things to consider. Where will you each live? Will you keep or sell the home? How are you going to share time with your children? How are you going to divide assets and debts? If you have been a stay-at-home parent, how will you support yourself?
An often overlooked area is making modifications to your estate plan, and specifically your Powers of Attorney. Failing to timely update these documents can have significant and undesirable consequences to your health and finances.
What is a Power of Attorney?
A Power of Attorney is a legal document granting authority to another person to make health care and financial decisions on your behalf such as:
- Authorizing medical care (hospital and nursing home)
- Authorizing experimental procedures and clinical trials
- Terminating life support
- Transactions for financial institutions, tax issues, real estate, and insurance
- Claims and Litigation
The individual you give authority to make these kinds of decisions on your behalf is known as your agent. You can grant your agent immediate authority, or they can only act upon your incapacity (i.e. you legally cannot make decisions for yourself). You can also grant your agent very broad powers or you can restrict them to making only specified medical and financial decisions.
A Power of Attorney can be a useful device for managing your affairs, so long as the individual you selected as your agent is someone you trust.
Why is it Vital to Update a Power of Attorney During a Divorce?
Although many Americans do not have an estate plan, for those that do, it is most common for married couples to name their spouse as their agent in their Powers of Attorney. It is important to recognize that this will not automatically change in the event of a divorce.
While a divorce is pending, your current estate planning documents are still valid. This means your soon to be ex-spouse still has authority to make medical and financial decisions on your behalf in the event of incapacity, and they may stand to inherit a substantial portion of your estate in the event you pass before the divorce is finalized. This may or may not match your wishes. Once a divorce is finalized, some standard conditions such as a spouse’s inheritance rights for one-half of the estate are instantly terminated. However, your ex-spouse will still have the right to make medical and financial decisions on your behalf until you take the necessary steps to change your Powers of Attorney.
While we do see situations where a divorced couple remain trustworthy friends and choose to leave their current documents in place, this is not often the case. In fact, even with amicable divorces, couples commonly elect to name someone else to manage medical and financial matters going forward.
In those cases, it is essential for the Power of Attorney to be revoked and a new one created, to guarantee someone other than an ex-spouse is authorized to act as an agent.
How is a Power of Attorney Revoked?
The revoking of a Power of Attorney can be accomplished in a couple different ways. You can sign a document declaring a Power of Attorney has been revoked. Alternatively, you can prepare a new Power of Attorney stating all preceding documents have been revoked. Occasionally, financial institutions retain a copy of your Power of Attorney on file. It is vital to notify those institutions that the Power of Attorney has been revoked.
If your current agent has copies of your documents, make sure all copies are returned and destroyed.
Do I Need to Hire a Lawyer for Assistance With a Power of Attorney?
When thinking about a divorce, you should speak with an experienced estate planning attorney as part of the process to guarantee your assets and decision-making roles are structured in accordance with your new wishes, existing documents are properly revoked, and new estate planning documents are prepared.
Although it may be difficult to focus on estate planning while also going through a divorce, it is critical you do not wait until your divorce is finalized. In Arizona, it may take between six months and two years from the initial filing for a divorce to be finalized and a lot can happen during that time. Delaying updating your documents until after your divorce is finalized can have unintended negative consequences which could have been avoided with advanced planning.
LaMance, K. (2020, August 03). Power of attorney and divorce. Retrieved May 25, 2021, from https://www.legalmatch.com/law-library/article/power-of-attorney-and-divorce.html
Choose the Right Divorce Lawyer in Arizona
Regardless of the choice you make, it’s important you make the best choice for you when hiring a divorce attorney. Remember: The decisions you make now can affect your future. Ultimately, choosing the best lawyer will depend on which lawyer feels best for you and your situation.