Going through the divorce process can be stressful, emotional, and overwhelming. Even if you and your spouse agree on divorce terms and seek an amicable divorce, ending a relationship involves many issues. Estate planning is an issue that is often overlooked during a divorce. Our North Carolina divorce attorneys help you take steps now to protect your estate during and after a divorce.
Four Things to Consider for Estate Planning During Divorce in North Carolina
Depending on your unique situation, you may need to address other issues. However, four things that everyone needs to consider for estate planning during divorce are:
Right of Elective Share by Spouse
As in many states, North Carolina provides an elective share for spouses so you cannot disinherit your spouse. The elective share law bases the amount of an estate a spouse can claim on the length of the marriage. The elective share is:
- 15% for marriages less than five years
- 25% for marriages between five and ten years
- 33% for marriages between ten and 15 years
- 50% for marriages of 15 years or longer
A spouse must make an elective share within six months after death. You can avoid the elective share by a spouse by executing a valid pre-nuptial or post-nuptial agreement that waives the elective share. Spouses can also enter a written agreement that mutually waives the elective share.
Changing Beneficiaries During a Divorce
Some assets pass directly to a named beneficiary outside of probate, including retirement accounts and life insurance policies. Many people rush to change the beneficiaries on these accounts before the divorce is finalized.
However, the law restricts changing beneficiaries on some accounts during the divorce process without your spouse’s written consent. An experienced estate planning attorney can help you identify accounts you can change during a divorce and develop strategies to protect other accounts, if possible.
It is not advisable to name minor children as beneficiaries on your accounts. Instead, a trust should be used in order to pass assets to minor children. Otherwise, a guardianship will need to be established and monitored by the courts until they reach 18 years of age. Many people do not want the expense and hassle of a guardianship, and perhaps more importantly, do not want children receiving inheritance at the young age of 18.
Estate Planning and Minor Children During a Divorce
If you do not have documents naming a guardian for your children, you need one as soon as possible. Your spouse receives sole custody of your children upon your death. However, if a child’s other parent is unfit to care for the child, the court may need to appoint a guardian. The court has jurisdiction to make this decision. However, you can make your wishes known in your Will.
You can also use your will and trusts to name a trustee to manage your child’s estate. Otherwise, your ex-spouse will likely be appointed to manage your child’s inheritance. Naming another person as a trustee gives you more say in how your child’s inheritance is used and at what age your child receives their inheritance.
Powers of Attorney and Health Care Directives
If your spouse is your power of attorney and agent for advance health care directives, you can revoke those rights now. You can then name a new agent to manage your finances and make health care decisions for you should you become incapacitated.
Schedule a Consultation With Our North Carolina Estate Planning Attorneys
Estate planning is an essential issue to consider during separation and divorce. Our attorneys are here to help. Contact our office today to discuss estate planning and divorce.
