When contemplating a divorce, there are numerous issues to consider. Where will you live outside of the marital home? How will you split custody of your children? How will you divide assets? If you have not worked outside of the home, how will you earn a living?
Divorces can obviously be complicated, especially when untangling assets and managing challenges with minor children.
One aspect of divorce law that is often overlooked is estate planning and updating estate documents such as a Power of Attorney. Failing to update these documents can have serious consequences to your finances and your health.
What is a Power of Attorney?
A Power of Attorney is a document which gives someone besides you the authority to make financial decisions on your behalf.
These decisions can include things like:
- Real estate transactions
- Banking transactions
- Insurance transactions
- Estate transactions
- Claims and litigation
- Benefits from government programs
- Tax matters
The person you designate as having the authority to make these types of decisions for you is called your agent.
You can give your agent authority immediately, or you can give your agent authority to act only if you become incapacitated. Being incapacitated means you are unable to make decisions for yourself.
It is possible to also limit the authority you give your agent or to give your agent general authority to make any financial decisions for you.
Occasionally, someone may create a Power of Attorney for a specific occasion such as if they know that they are going to be in surgery and wish to give someone authority to act on their behalf while they are under anesthesia. Or, clients sometimes give their attorney the authority act for them to sign legal documents when the client may be out of the country and unavailable.
A Power of Attorney can come in a variety of options, but the bottom line is, this document is used to give someone else the authority to act on your behalf. This can be a useful tool for managing your affairs. However, problems can arise when the person you designated as your agent is no longer a person you trust.
Why is it Important to Update a Power of Attorney During a Divorce?
Although the majority of Americans are estimated to not have an estate plan of any kind including a Power of Attorney, for those who do have a properly executed Power of Attorney, oftentimes a spouse is the person chosen as an agent.
Generally, this is not a problem, until a couple is divorcing.
When a couple divorces, some provisions like a spouse’s share of an estate in a will are immediately invalidated. That doesn’t necessarily mean the whole will is invalid, just the part where the ex-spouse would take a share of the estate.
However, this is not true of a Power of Attorney. Instead, if you have given your spouse the authority to make financial decisions on your behalf, even though you have divorced your spouse, they still have the authority to act for you.
It’s possible that a divorcing couple could remain trusted friends and not wish to change these legal arrangements. But, it is more likely that someone who is going through a divorce would prefer that their ex-spouse not be able to handle their financial affairs.
In that case, it is imperative that the Power of Attorney be revoked and a new one enacted in order to ensure that someone other than the ex-spouse is authorized to act as an agent.
How Do I Revoke My Power of Attorney?
A Power of Attorney can be revoked in a few different ways. First, a signed document can be drafted stating that a Power of Attorney has been revoked.
Second, any quality new Power of Attorney should say that all previous such documents have been revoked. However, it is best to specifically name the previous Power of Attorney, the date it was signed, and the person designated as agent when explicitly revoking that authority.
Further, if your agent has documentation giving them authority to act, you will want to request that the documentation be returned so it can be destroyed.
Sometimes institutions also keep a copy of the Power of Attorney on file. It is important to inform those institutions that the previous Power of Attorney has been revoked.
When revoking a Power of Attorney, it is best to ensure that it is replaced with a new Power of Attorney.
Should I Hire a Lawyer For Help With a Divorce?
If you are going through a divorce and have ever executed a Power of Attorney giving your soon-to-be ex-spouse the authority to make decisions on your behalf, then contact an experienced divorce lawyer in your area. They can help guide you in updating your estate documents, including your Power of Attorney.
Don’t wait until the divorce decree is finalized. Anything can happen in the time it takes for the judge to sign the decree. If it is important to you that someone else be able to make decisions about your finances other than your ex-spouse, you’ll need to update those documents immediately.