Must Do's at Separation

When separation and divorce are contemplated, these steps should be carefully considered with benefit of counsel:

    • Change beneficiaries to insurance
    • Subject to disclosure to divorce court
Avoid Waster by Spouse
    • If insurance for benefit of minor, designate trust in control of third party to protect children
    • Former spouse who may be primary guardian
    • Consider Gift to Irrevocable Education Trust
Exception to divorce equitable distribution:
  • special circumstance such as education fund for children to protect against spouse with addictions
  • gifts to irrevocable trust for children dedicated to educational expenditures 
Durable Financial Power of Attorney

Powerful and dangerous tool in spouse hands which may allow pilfering bank and investment accounts

Individual Retirement Accounts 
  • Upon the death of the owner, the value of the account will be payable to the beneficiary
  • Changing to third party accelerates income tax
  • Retirement Equity Act [REA] adds automatic pre-retirement survivor spousal benefit; also see Employee Retirement Income Security Act [ERISA]
  • Contrary public opinion IRA are not subject ERISA or REA but pensions from employer-sponsored qualified retirement plans are subject to both laws
  • Review of Shareholder Agreements or Buy/Sell Agreements
    • Typically provide "buy-out" if one party involved in divorce
    • If there are significant negative consequences that will ensue if a complaint for divorce is filed, a renegotiation of the shareholder's agreement might be warranted.