Estate Planning During a Divorce in Indiana

By Heather Frances J.D.

Divorcing spouses often think of their divorce in terms of property division, child custody and support issues, but divorce also affects a couple’s estate planning. Divorcing spouses can change their wills and other documents to ensure their assets are distributed according to their wishes should something happen to them while they are going through divorce.

Divorcing spouses often think of their divorce in terms of property division, child custody and support issues, but divorce also affects a couple’s estate planning. Divorcing spouses can change their wills and other documents to ensure their assets are distributed according to their wishes should something happen to them while they are going through divorce.

Wills

Wills distribute certain property to the beneficiaries named therein, so one of the first things a person might do when going through a divorce is change his will. Wills can be amended at any time or entirely rewritten, and wills can specifically disinherit the writer’s spouse to the maximum extent permitted by law. However, as long as spouses are legally married, the surviving spouse can choose to inherit the portion of the estate allocated by state law — known as his "elective share" — regardless of what the will says. There are conditions on this inheritance, however. If the surviving spouse chooses to take an elective share, this is likely the only share he will be permitted to claim against the deceased spouse’s estate. Since Indiana law does not permit spouses to completely disinherit each other, spouses can sign a divorce settlement or separation agreement to address possible inheritance rights while they are divorcing. These agreements can include a statement that each spouse waives any legal rights he might have to receive an elective share under Indiana law.

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Beneficiary Designations

Some property is distributed under the terms of documents other than a will. For example, life insurance policies, IRAs and payable-on-death bank accounts are distributed according to beneficiary designations rather than a will. Though Indiana courts can issue temporary orders to keep a divorcing couple from transferring assets during a pending divorce, Indiana courts do not have specific authority to keep spouses from changing their beneficiary designations. However, if one of the spouses wishes to limit the other spouse’s ability to change his beneficiaries while the divorce is pending, the court can grant such a request. To avoid these issues during the divorce, spouses may wish to make these beneficiary changes as part of their estate planning prior to filing for divorce.

Power of Attorney Changes

Spouses often sign powers of attorney or advance healthcare directives as part of their estate plans, and these documents give the spouses authority to act for each other, giving them the ability to make financial or medical decisions when a spouse becomes incapacitated. Spouses can change these powers of attorney at any time while mentally competent. Thus, divorcing spouses may wish to change such documents to name another person to act on their behalf.

Trusts

When a couple has children, they have the option to create a trust to provide for their children should something happen to either of them during their divorce. A trust is a separate legal entity that holds property for the benefit of someone else, and the trustee, or manager of the trust, may be another person or corporation. Thus, the children can inherit from their deceased parent without the surviving parent’s interference. With a trust, the surviving parent does not have control over the child’s inheritance from the deceased parent.

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References

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