Updating Your Estate Plan After a Divorce in Will County

What Illinois changes on its own

Three rules do some of the work for you. Each has limits, and each only starts when the judgment is entered.

Your will

Under 755 ILCS 5/4-7(b), a dissolution of marriage revokes every gift, power of appointment and nomination to a fiduciary office that your will gave to your former spouse. The will then takes effect as if the former spouse had died before you. The rest of the will stays in place.

Your revocable trust

The Illinois Trust Code has a matching rule at 760 ILCS 3/605. Unless the trust or the divorce judgment says otherwise, divorce revokes the provisions of a revocable trust that pertain to the former spouse. The trust is then run as if the former spouse died on the day the judgment was entered. A trustee who did not know about the divorce is not liable for acting in good faith, and the provisions come back if you remarry the same person.

Life insurance

Under 750 ILCS 5/503(b-5), a former spouse's designation as beneficiary of a life insurance policy stops being effective after the judgment unless one of three things is true. The judgment names the former spouse, you name them again after the judgment, or they hold the money in trust for a child or dependent. If the designation fails, the money goes to the backup beneficiary, or to your estate if there is none. These rules do not apply to policies governed by ERISA, the federal employee group life insurance law, or another federal law that overrides them.

What the law does not fix for you

The statutes above name wills, revocable trusts and life insurance. Do not assume the same rule covers other forms. Retirement accounts, bank accounts with a payable on death name, annuities, and a transfer on death deed each follow their own paperwork. If your ex is the named person on any of them, check the form itself.

Automatic removal also leaves holes. If your will left everything to your spouse and named no backup, removing the spouse can leave a gap. Property can end up going to people by default, not by your choice. A divorce removes a name, but it does not write the plan you want.

Powers of attorney and health care directives are a separate matter. Many people named a spouse as the agent. Sign new ones that name someone you trust now. See the pages on property powers of attorney and health care powers of attorney.

A working list to update

• Your will, including the executor and the guardian for minor children.
• Any revocable trust, including the successor trustee.
• Your property power of attorney and health care power of attorney.
• Your living will.
• Beneficiary forms for life insurance, 401(k), IRA, pension and annuities.
• Payable on death and transfer on death names on bank accounts, brokerage accounts and vehicles.
• Any recorded transfer on death deed for your home.
• Your insurance policies, including who owns them and who pays the premiums.

During the divorce, not just after it

The rules above wait for the judgment. Until the judgment is entered, your spouse is still your spouse, and your documents still say what they said. The automatic stay that starts with the case covers abuse and hiding children. It does not freeze beneficiary forms.

That does not mean you should rush to change forms the week you file. A settlement can speak to life insurance and the court allocates marital life insurance in the judgment under 750 ILCS 5/503(b-5)(1). Talk to Jeff before you change anything while the case is open, so your new documents and the divorce papers agree with each other.

The divorce papers can matter later too. If a settlement says one spouse keeps a policy for the other, or keeps a retirement benefit in place, your estate plan has to respect it. Read divorce and legal separation, property division and pension division for how those pieces fit.

Children, guardians and a new plan

If you have minor children, the divorce changes who will care for them and who handles their money if both parents are gone. A parent can name a guardian for a minor in a will or another signed writing. Revisit that choice, and review who holds money for the children and until what age.

For many people this is the point where a fresh plan makes more sense than patching the old one. A new will, a new trust if it fits, new powers of attorney and a clean set of beneficiary forms can all be done in one pass. Jeff can tell you which of your old documents still work and which should be replaced.

Reviewed by Jeff McCarthy, Attorney, Inspired Law Group, 136 E 9th St, Lockport, IL 60441.