Page 54 - December 2019 FOP Magazine

Divorce, blended families and estate plans
If your marriage has ended in divorce, your spouse has died, or you have remarried and both spouses have children from a prior marriage, you must revisit your estate plan and update it, along with all your beneficiary designations.
Divorce
Going through the process of ending your mar- riage can be stressful enough without worrying about the status of your assets in the event of
your death. The fact is, you could die during the divorce proceedings and before the divorce becomes official. Consequently, you should know that your estranged spouse would receive any funds held in financial ac- counts, or any insurance proceeds where that spouse is the named beneficiary. Therefore, it is advisable to change the beneficiaries immediately.
It is almost certain that your current estate plan provides that everything you own will become your spouse’s at your death. For that reason, if you have an existing estate plan, whether it is a will or a living trust, you should update it immediately.
You should also update your healthcare and financial pow- er of attorney documents. Undoubtedly, you named your es- tranged spouse as your agent in both documents. As a result, the spouse has the right to sign your name for financial transac- tions, access your accounts, and be in charge of healthcare and life support decisions. I am assuming that is not something you would want, given the current circumstances.
Once the divorce is final, you may need to update your
beneficiaries again. Furthermore, if you held a trust with your spouse, revoke that trust and transfer assets to a new trust. Blended families
If you have remarried and you and your spouse have children from a prior marriage, you need to carefully consider your in- tentions for property distribution upon the death of the first spouse and after the survivor dies.
TOM TUOHY
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Each spouse can have separate living trusts and provide for the outright distribution of certain assets when one spouse dies. The trust can also hold assets for the spouse’s care and welfare and distribute to the other spouse’s children upon the surviving spouse’s
FOP
Benefits Plan
death.
A joint marital living trust can be irrevocable
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Carefully review all beneficiary designations. Often spous- es in second marriages each have sufficient funds and name children from a prior marriage as the beneficiary of life insurance or deferred compensation accounts. You can also choose to have individual accounts shared between your spouse and your children.
Be clear, in writing, regarding all healthcare issues, organ donations, and funeral plans. Certainly, you want to avoid any conflicts between children and a surviving spouse during an already difficult time. A healthcare power of at- torney document directs what you want to be done.
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upon the death of the first spouse.
If your family situation is similar to any of these examples, or if you are single or had one marriage, you must have a current estate plan.
Living trusts
At the end of your life, or if you become incapacitated, if you have property or bank accounts in your name, they are at risk of probate.
• A will must be probated. The rule is no one can legally sign your name. Therefore, at your death, or incapacity, all assets in your name are subject to the full probate pro- cess, which averages 18 months and is costly.
• A living trust completely avoids probate.
• A living trust estate plan includes both healthcare and
financial power of attorney documents and a last will and testament for guardianship of minor children and to “pour over” any assets still in your name at your death, out of probate.
A revocable living trust is a written, legal document that al- lows you to privately and efficiently pass your assets (real prop- erty, bank accounts, stock, saving certificates, personal prop- erty, etc.) to your family, friends or charities after your death — outside of probate court. Your life insurance policies and deferred compensation accounts can name your living trust as beneficiary, subject to essential tax considerations.
Call my office today to lock in your FOP 50 percent reduced rate for a living trust. Registration in the Benefits Plan for FOP members and family is free. Visit www.fopbenefitsplan.com or call 866-729-5454 for assistance with registering.
Tom Tuohy is the founder of Tuohy Law Offices and the FOP Ben- efits Plan. He has been a police lawyer for 37 years. His father was a CPD detective, and his grandfather was CPD Chief of Major Investigations. You can reach Tom at 312-559-8400.
54 CHICAGO LODGE 7 ■ DECEMBER 2019