October 19, 2017
Divorce has an enormous impact upon your Wisconsin estate planning documents and Wisconsin beneficiary designations. In a series of articles, our estate planning attorneys will address the impact that a marriage or divorce may have on your estate planning documents and beneficiary designations in Wisconsin. We will discuss some of the actions to take upon getting married, filing for a divorce, and at the conclusion of a divorce.
In this immediate article, we will address the impact that divorce has on your Power of Attorney documents.
Wisconsin Law Will Update Your Estate Plan If You Don’t Take Action
In the State of Wisconsin, divorce will automatically update and change beneficiary designations and estate planning documents by statute – even though no action has been taken by the person marrying or divorcing. Wisconsin statutes force changes to most existing Revocable Trusts,Last Will and Testaments,Durable Power of Attorneys and Powers of Attorney for Health Care documents.
To avoid allowing the Wisconsin legislature to decide how your estate plan should be updated in the event of divorce, you need to address your desires on your own. Failing to do so can result in costly misunderstanding and family disputes.
Divorce and Financial Durable Power of Attorney
The Effect of Filing for Divorce on Your Wisconsin Financial Durable Power of Attorney
Unless your power of attorney document states otherwise, any spouse who is named on your Financial Durable Power of Attorney will lose those powers when you file for divorce. Wisconsin Statute 244.10(2) states that an agent’s authority terminates when an action for divorce is filed unless the power of attorney states otherwise.
An experienced estate planning attorney will know to review your Financial Durable Power of Attorney immediately upon filing for divorce to ensure that your Financial Durable Power of Attorney names appropriate agents to handle your financial affairs if you are unable to do so.
While Wisconsin law ends a to-be-divorced spouse’s authority under a power of attorney, most banks and other financial institutions will not know about your divorce. Therefore, they may honor your existing Financial Durable Power of Attorney if your soon to be ex-spouse presents it at a bank or other financial institution. Moreover, it is unlikely that your soon to be ex-spouse would know that he or she has been removed by law, and may make financial decisions for you in good faith by relying on the power of attorney as written.
If your Financial Durable Power of Attorney does not have successor agents after your spouse, it will be entirely invalid upon filing for divorce. In addition, your Financial Durable Power of Attorney may not have powers relating to divorce or may have your spouse’s family as successor agents.
Take Action: Update Your Financial Durable Power of Attorney
When filing for divorce in Wisconsin, we suggest immediately updating your Financial Durable Power of Attorney by creating a new one. If you do not have an existing Financial Durable Power of Attorney, we suggest immediately creating one, including divorce powers, so that your preferred person can act as your agent for your financial decisions including decisions related to the divorce process if something were to happen to you during the divorce process. This power of attorney will then continue to be valid following your divorce and will not have to updated after the conclusion of the divorce.
If you are unable to handle your financial decisions during divorce or after your divorce is finalized, a simple update of your Financial Durable Power of Attorney will ensure that it has the authority to handle your financial needs. In updating this important document, you can ensure that you have your preferred person in place as your financial agent to represent you for your divorce and future financial needs.
Divorce and Power of Attorney for Health Care
The Effect of Filing for Divorce on Your Power of Attorney for Health Care
Although Wisconsin Statute 155.40 does not immediately invalidate your Power of Attorney for Health Care upon filing for divorce, it should be updated upon filing for divorce. During the divorce process, if you are unable to make your health care decisions, your soon to be ex-spouse will be in charge of your health care decisions, if that spouse is named first on your Power of Attorney for Health Care (POAHC). This is normally not a desirable outcome. An outdated POAHC may result in costly court actions and court hearing to disrupt his or her health care decision making powers.
As experienced estate planning lawyers, we have seen incidents where a hospital or doctor was unaware of a divorce. In those cases, the medical professionals followed the directions of a soon to be ex-spouse. (The POAHC was still valid because that soon to be ex-spouse was named first – and because a POAHC is not invalidated until the divorce is finalized.)
Given the above circumstances, we suggest immediately updating the POAHC after filing for a divorce. We also advise inserting language into estate planning documents completed during the divorce process to make it clear that you intend that your estate planning documents continue to be valid after a divorce is finalized.
The Effect of a Divorce Judgment on Your Power of Attorney for Health Care
Even though the filing for divorce does not directly impact an existing Power of Attorney for Health Care document, Wisconsin Statute 155.40(2) provides that upon the completion of a divorce, the entire Power of Attorney for Health Care is invalid if a former spouse was named in it. In other words, when a judgment of divorce is signed by a judge, any existing Power of Attorney for Health Care is revoked and invalid. If you become unable to make your health care decisions without a valid Power of Attorney for Health Care in place, you will likely need a costly guardianship proceeding. (In a separate article, we discuss why you want to avoid guardianship.)
We’ll Help Update Your Wisconsin Power of Attorney Documents
At Wokwicz Law Offices, we have extensive experience helping clients navigate their changing estate planning needs as they navigate the difficult process of divorce. We invite you to talk with us about how we can help you.