Estate Planning Issues in a Divorce Situation: An Update and Standing Orders.

• Author: Marshall, Donna J.

In 2012, Ms. Brunner published, in this Journal, a review of 'estate planning type' rights during 1) the pendency of a divorce action--still legally married--and 2) after the final judgment is entered--no longer married. (1) This article provides an update on Florida law and reflects upon automatic standing orders that are entered in divorce actions. This article suggests that standing orders may have the unintended effect of enlarging the rights of surviving spouses who have filed to dissolve their marriages beyond the rights of surviving spouses in intact marriages. It proposes language for standing orders that follows, rather than expands, the spousal rights under Florida's Probate Code.

Incapacity of One Party During the Divorce

The first situation reviewed is when one party becomes incapacitated during the pendency of the divorce, such as permanent loss of mental ability or temporary physical injury. The decision maker will be determined by the documents the incapacitated spouse has in place or, if none, by Florida law.

* Durable Power of Attorney--Under a validly executed durable power of attorney (DPOA), the desi"nated decision maker (called the agent" or "attorney-in-fact") acts on behalf of a principal in accordance with the authority conferred under the document and under Florida law. If a spouse executes a DPOA, designating the other spouse as agent, unless the document provides otherwise, it is automatically terminated upon the filing of a petition to dissolve the marriage. This prevents the agent, a soon-to-be former spouse, from using the DPOA to misappropriate the assets of the principal spouse. This is consistent with Florida's equitable distribution law that provides the date of filing as the cut-off date to determine marital verses non-marital assets. (2)

* Health Care Surrogate--A spouse is often designated as a health care surrogate (HCS) to make healthcare decisions for the other spouse and/or receive health information on his or her behalf. (3) This designation is effective until revoked, terminated under its terms, or upon entry of final judgment of dissolution of marriage, when it is automatically revoked. (4) The filing of a petition for dissolution of marriage has no legal effect on a HCS designation, unless the document provides otherwise. But although the filing of a petition does not automatically revoke a designation under a HCS, a principal spouse filing for dissolution of marriage can always voluntarily revoke a designation.

* Living Will--Another estate planning document is a living will. A spouse may make a living will ex-pressing his or her desires concerning life-prolonging procedures and may designate a surrogate to execute his or his wishes. (5) Unless the document provides otherwise, as with a health care surrogate, an automatic revocation of the former spouse as surrogate arises upon entry of final judgment of dissolution of the marriage between the principal and the surrogate. (6) A spouse may wish to voluntarily amend the living will upon filing for dissolution of marriage. If not, the soon-to-be former spouse would continue to make decisions regarding the withholding of life-prolonging procedures.

* Health Care Proxy--In the absence of a health care surrogate or living will, or judicially appointed guardian, health-care decisions for an incapacitated patient are made by a patient's spouse. (7) While it may be possible for a spouse to execute a simple, interim "advance directive" writing by which to make a statement regarding the spouse as a health-care decision maker, the best course would be to execute an updated HCS and living will to designate a new surrogate. (8)

* Guardianship of Person or Property--If no valid DPOA or HCS exist and a spouse becomes incapacitated, the other spouse could seek to be appointed guardian over the other ("of the person") and over the other's assets ("of the property"). Preference in whom the court may appoint as guardian is given to someone related by marriage or blood to the incapacitated spouse. (9) Pending dissolution proceedings may be a sufficient conflict of interest so as to disqualify the divorcing spouse as a candidate for guardian. (10) However, to avoid dispute before the court, the client (while competent) can declare a preneed guardian and state whom he or she prefers to serve as guardian. (11) The preneed guardian then has priority in appointment unless the court determines that appointing such person is contrary to the best interests of the declarant. (12)

FIGURE 1 DOCUMENT BASIC EFFECT IN DISSOLUTION SITUATION Power of Attorney Spouse's authority as agent terminates automatically upon filing for dissolution. Health Care Surrogate Spouse's authority as agent Living Will terminates automatically Advance Directive upon final judgment for dissolution. Declaration of Preneed Spouse may have a Guardian disqualifying conflict of interest as a result of the dissolution proceedings. Last Will and Testament Spouse's interest (including Revocable Trust fiduciary appointment) terminates automatically upon final judgment for dissolution. Beneficiary Designation for Spouse's interest voided life insurance policy, annuity, automatically upon final employee benefit plan, IRA, judgment for dissolution if pay-on-death account or designation made prior to security dissolution. But note exception for ERISA plans. Jointly-titled (e.g., bank or Tenants by the entireties investment account, real becomes tenants in common estate) automatically upon final judgment for dissolution. DOCUMENT FLORIDA STATUTORY REFERENCE Power of Attorney FLA. STAT. [section]709.2109(2)(b). Health Care Surrogate FLA. STAT. [section]765.104(2). Living Will Advance Directive Declaration of Preneed FLA. STAT. [section]744.309(3). Guardian Last Will and Testament FLA. STAT. [section][section]732.507(2) Revocable Trust and 736.1105. Beneficiary Designation for FLA. STAT. [section]732.703; see 29 life insurance policy, annuity, U.S.C. [section]1104(a)(1)(D). employee benefit plan, IRA, pay-on-death account or security Jointly-titled (e.g., bank or FLA. STAT. [section]689.15. investment account, real estate) * Successor Trustee of Trust--Revocable trusts are a common part of estate planning in which the settlor retains some degree of control over its terms. If the soon-to-be former spouse is named as a trustee of a trust (as either the initial or successor trustee) and the trust instrument does not address the situation of divorce (or filing for divorce), that spouse may be able to serve as a trustee both during and after the divorce. The creator of the trust (settlor) or the trust beneficiaries may, or may not, be able to remove the anticipated ex-spouse as a trustee under terms of the trust instrument or under Florida's Trust Code. (13) After a dissolution action has been...