There is the mistaken notion that there is little benefit to the estate planning that can be accomplished during a divorce action. Presumably, this misconception is due to the Automatic Orders that go into effect at the commencement of the action for divorce, which serves to “freeze” the parties’ assets and beneficiary designations. Nevertheless, a significant amount of estate planning can be accomplished without violating the Automatic Orders.
Consider, for example, the following scenario: Ann and Mike have no children and are currently involved in an action for divorce. Ann has approximately $1,000,000.00 in separate, premarital property and another $1,000,000.00 in marital assets that are subject to equitable distribution in the action for divorce. Mike has no assets of his own.
If Ann and Mike’s dispute ends in a divorce, and assuming there is a equal division of the marital property, Mike would be entitled to $500,000.00. If; however, Ann dies before the action for divorce is resolved, Mike would be Ann’s sole heir and would be entitled to the full $2,000,000.00. This would clearly be an inequitable result, and can be avoided by Ann executing a Will that would leave her estate to someone other than Mike.
It should be noted; however, that even if Ann does execute a Will, Mike would still be entitled to exercise his right of election, which generally speaking would entitle him to a third of Ann’s estate. But that is still a far better result than Mike receiving the entirety of Ann’s assets.
Aside for the financial considerations, a spouse has priority in making health care decisions for his or her incapacitated spouse under the NYS Family Health Care Decisions Act. In the case of Ann and Mike, we can be certain that Ann would not like Mike to make health care decisions for her if she becomes incapacitated while the action for divorce is pending. The simplest way to avoid this issue would be for Ann to execute a Health Care Proxy that designates someone other than Mike as her health care agent.
In light of the above, it should be clear that although estate planning is limited while an action for divorce is pending, there are still powerful and affordable techniques that can be taken to prevent significant inequities from occurring.
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