Forbes.com recently featured an article we wrote about our celebrity-based Trial & Heirs' Top Five Estate Planning Tips for Divorcees. Here's a shortened version. Go to Forbes.com for the full article:
1. Update your will and/or trust. Life events like divorces are a critical time to update all estate planning documents with an experienced attorney.
Take the case of Gary Coleman. Since his death, a variety of documents have surfaced purporting to be his will. We know that Gary Coleman was divorced in 2008 from his wife, Shannon Price. It was on an episode of Divorce Court after all! The problem is that Price claims that she's entitled to inherit all of Coleman's assets based on a 2007 handwritten will and as his "common-law wife." Now it looks like the estate will be tied up in a long and nasty fight. If Gary Coleman had an estate planning attorney draft a clear will after his divorce, the impending legal battle may have been avoided.
2. Don't forget the insurance. Many people who get divorced forget to change their life insurance beneficiaries to someone other than their ex-spouse.
Dennis Hopper was locked in an ugly divorce fight with his fifth wife, Victoria Duffy-Hopper. She blamed his children for convincing him to start the divorce as a way to cut her out of his estate plan. Hopper asked the divorce judge for permission to change his life insurance policy to remove his wife and their young daughter as beneficiaries. His request was denied and the judge said that issue would have to wait for trial. But Hopper died first, and the life insurance was never changed.
3. Act now, even before the divorce is final. Divorces can be extremely messy and may drag on for years. What happens if one of the spouses dies or becomes disabled during the divorce proceedings?
It's reported that Tiger and Elin Woods are in divorce negotiations now and that Elin is asking for $750 million. What if Tiger is in a car accident? What money does he want Elin to receive? It is probably a lot less than what his estate planning documents had dictated prior to the divorce. Hopefully, Tiger is prepared for the unexpected and has updated his estate planning documents even before the negotiations are concluded.
4. Choose a new executor and/or trustee wisely. If something does happen to you, whom do you trust to make sure that your beneficiaries are financially protected?
A good example of problems that can arise is the nasty battle going on between Ronald Perelman, the billionaire Revlon chairman, and his ex-father-in-law, Robert Cohen. Perelman was named as the executor under his ex-wife's will. In spite of crystal clear instructions in the will that showed that his ex valued her relationship with her father, Perelman launched a series of lawsuits against Cohen in the name of her estate. He did this even though Cohen was elderly, infirm and paralyzed. Perelman wouldn't have been able to do this if his ex-wife hadn't named him as her executor.
5. Create a new Medical Power of Attorney and Advance Directive. Even if you are comfortable with an ex-spouse making financial decisions, what about the medical decisions?
In Gary Coleman's case, his ex-wife, Price, did pull the plug after he sustained a head injury and was put on life support. Is this what Coleman would have wanted? We'll never truly know, but legally Price had the right to make this decision through Coleman's advance directive.
Tiger Woods pay heed! Elin already came after you with a golf club (allegedly!), do you really want her making your termination-of-life-support decisions?
Posted by: Andrew W. Mayoras and Danielle B. Mayoras, co-authors of Trial and Heirs: Famous Fortune Fights! and co-founders of The Center for Probate Litigation and The Center for Elder Law in metro-Detroit, Michigan, which concentrate in probate litigation, estate planning, and elder law. Andrew and Danielle are husband and wife attorneys, professional speakers and consultants across the country. Follow us on Facebook and Google+.