Divorce Law v. Estate Law: What Divorce Lawyers Can Do To Protect Clients’ Estate Rights

Welcome back to Law Tips. I hope you took advantage of the insights Kent Jeffirs, shared a few weeks back, to kick off this two-part segment on the issues that can arise when one party dies before the final dissolution decree is entered. (Click Here to read, or scroll down) Kent’s continued guidance this week moves specifically into what divorce lawyers can do to protect clients’ estate rights. His foremost piece of advice is: Advise divorce clients about estate and beneficiary designation issues early and often!

In many cases (especially those involving employer sponsored plans) there is no clear answer to the questions that arise when a client dies who failed to change his or her beneficimy designations following a divorce. Therefore, the first and most urgent advice any lawyer should give a divorcing or recently divorced client: CHANGE YOUR BENEFICIARY DESIGNATIONS ASAP!

Divorce lawyers must advise, advise, advise. While a divorce lawyer may not be able to force clients to change their beneficiary designations (even when they are clearly in such clients’ best interests), divorce lawyers do not want to leave themselves exposed to claims that “you never said that could happen” by former clients or their family members. When it comes to making proper beneficiary designations, an ounce of prevention could be worth a substantial inheritance or years of contentious litigation.

Divorce lawyers must discuss issues of estate planning and beneficiary designations with their clients at the very beginning of representation and while the divorce is pending. If allowed to change beneficiary designations prior to the divorce being filed or while it is still pending, advise clients to change their designations unless prohibited from doing so by a court order. If the divorce is already filed or if there is a restraining order or provisional order already in effect prohibiting any changes to beneficiary designations, consider petitioning the divorce court to provisionally allow specified changes to designated beneficiaries based on the hardship or inequitable results that would occur if a party died before the divorce was finalized.

While this may seem overly precautious to some for provisional orders when there is no immediate threat to the health or life of a client, the small effort necessary to include such provisions in provisional orders and to make such beneficiary changes before or at the time the divorce is filed or even while a divorce is pending is nothing compared to the financial devastation that could occur to the deceased client’s family members without such changes. Remember, the surviving spouse in a divorce where no final decree of dissolution was entered can claim any individually titled property he stood to lose in the divorce, all jointly titled property as the surviving co-owner, plus a spousal allowance of $25,000 and an intestate or elective share of any assets of the deceased spouse’s estate that were titled in her name alone if the surviving spouse was fortuitous enough to have his spouse die while the divorce is pending.

In furtherance of divorce lawyers documenting their disclosure and advice concerning these issues, it is recommended that divorce lawyers include in their engagement agreements that it is the client’s responsibility to make appropriate changes to his or her estate plan and beneficiary designations and request that the client provide the attomey with a copy of any beneficiary designation changes for the attorney’s file when the client changes their beneficiary designations.

Finally, upon the entry of the dissolution decree and the finalizing of the representation, divorce lawyers should send an appropriate closing letter which sets forth all of the client’s responsibilities following the entry of the final dissolution decree including the client’s responsibility to make appropriate changes to his or her estate plan and beneficiary designations. Just as suggested above for inclusion in engagement agreements, the closing letter should also request that the client provide the attorney with a copy of any beneficiary designation changes for the attorney’s file when the client changes their beneficiary designations.

Thanks again to Kent Jeffirs for his generous contributions to Law Tips. FYI, Kent offers a comprehensive discussion of the situations you may encounter with your clients during his CLE presentation, addressing subjects such as, executors, ERISA and divorce court jurisdiction. If you are interested in the Video Replay or the On Demand Seminar of  “The Main Event: Divorce Law vs. Estate Law & Designated Beneficiaries,”  Click Here.

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About our Law Tips faculty participants:
Kent A. Jeffirs is a sole practitioner in Crown Point, Indiana, who for the last 22 years has concentrated his legal practice in estate planning, probate and trust administration, guardianships, real estate and small business counseling. In 2007, Mr. Jeffirs was one of the first group of Indiana attorneys to be board certified as a Specialist in Wills, Trusts Estates by the Indiana Trust and Estate Specialty Board. He has also testified in court proceedings as an expert witness on probate matters. Mr. Jeffirs received his B.A. degree, with honors, from the University of Notre Dame, and his J.D. degree, magna cum laude, from Indiana University, Bloomington.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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