Estate planning issues in a dissolution of marriage.

• Author: Brunner, S. Dresden
• Position: Family Law

If something should happen to your divorcing client--let's call her Luci--and she dies before the divorce is final, can her husband still get her property under the terms of her will (which she did not change)? Or, if she is injured in an accident and cannot make decisions for herself, can her husband make healthcare decisions for her or handle her finances? This article will review the rights of control under certain documents and basic inheritance rights of a spouse during two general periods in a dissolution of marriage: 1) after the petition for dissolution is filed, but before final judgment, still legally married; and 2) after the final judgment is entered, no longer married.

Incapacity of One Party--Who Makes Decisions and Controls Property?

What happens when one party in a marriage becomes incapacitated? The incapacity could be permanent due to loss of mental ability or temporary due to a recoverable physical injury. Who will make decisions for Luci's healthcare? Who will have the ability to control Luci's financial and business matters? The decisionmaker will be determined by the documents she has in place or, if none, by Florida law.

* Durable Power of Attorney--A durable power of attorney is a document giving the powers of one person to another person. A power of attorney does not have to be filed with the court, but does have to be executed with the same formalities as a last will and testament (signed by a principal, two witnesses, and notarized). (1) If Luci has validly executed a durable power of attorney, that

designated decisionmaker (called the "agent" or "attorney-in-fact") can act in accordance with the authority conferred under the document. This authority is exercisable even after Luci--the "principal"--becomes incapacitated if the power of attorney is "durable." (2) If it is "nondurable," the power is terminated upon Luci's incapacity. (3)

If Luci has named her husband as her agent under her power of attorney (whether durable or not), Florida's new power of attorney act provides for an automatic termination of all authority granted to the spouse under the power of attorney upon the filing of an action for dissolution or annulment of the marriage or legal separation of the agent to the principal. (4) The statute seeks to minimize the risk that the soon-to-be former spouse would withdraw all of the assets of the other spouse using the power of attorney. The principal could draft a contrary provision in the power of attorney, however, and override the statute's default provision. Upon the death of the principal, the authority of the agent ceases, and the power of attorney terminates. (5)

* Guardianship of Person or Property -- If Luci did not have a valid power of attorney and became incapacitated, her husband could petition the court to be appointed guardian over her ("of the person") and over her assets ("of the property"). Preference in whom the court may appoint as her guardian is given to someone related by marriage or blood to the incapacitated person. (6) In light of the dissolution proceedings, the court may give preference to someone other than the spouse. However, Luci can declare a preneed guardian to state who she prefers to serve as her guard ian, if that became necessary during the divorce proceedings. (7) Although a preneed guardian may be unnecessary for many clients, those with significant assets or those who may become incapacitated in the foreseeable future should be advised of a preneed guardian as an advance planning tool and safeguard to complement the dissolution proceedings.

* Successor Trustee of Trust--Luci may have established a revocable living trust as part of her estate plan during her marriage. Many individuals choose a revocable living trust as an alternative to a complicated and/or contested probate proceeding after their death. Also called a revocable inter vivos trust, this trust holds Luci's property and is used for her benefit as the settlor during her life and for the benefit of the designated trust beneficiaries at the time of her death. Because it is revocable, the settlor has the ability to amend the trust and can even serve as trustee during capacity.

If the spouse is named as a trustee of a trust (either an initial or successor trustee) and the trust instrument does not address the situation of divorce (or filing for divorce), the spouse may be able to serve as a trustee during and after divorce. The settlor or trust beneficiaries may or may not be able to remove the spouse as a trustee under terms of the trust instrument or under Florida's Trust Code in F.S. Ch. 736 (2011). While Luci has capacity, as settlor of her trust, she may wish to amend the trustee succession or the power of removal of trustee provisions set forth in her trust instrument.

* Healthcare Surrogate--As part of her comprehensive estate plan, Luci may have designated a healthcare surrogate. This document designates a person to make healthcare decisions for the principal when the principal is incapacitated to provide informed consent. (8) This designation is effective until it is revoked, unless the document states a time of termination. (9) If Luci has designated her soon-to-be exhusband as her healthcare surrogate, she may wish to revoke the document at such time as she decides that, should she become incapacitated, she does not wish for her spouse to make healthcare decisions for her.

* Living Will--Another estate planning tool utilized by Luci is a living will. A person may make a living will expressing his or her desires concerning life-prolonging procedures and may designate a surrogate within the document to execute his or her wishes. (10) In the absence of a revocation of the surrogate, the designated surrogate can act. If Luci...