Even if the process is amicable, divorce can still be one of life's most stressful events. With so many major changes taking place, it’s easy to forget to update your estate plan. After all, dealing with another lawyer is probably the last thing you want to do. But failing to update your estate plan for divorce can have potentially tragic consequences.
Your marriage is legally still in full effect until your divorce is final, so if you die or become incapacitated while your divorce is ongoing and haven’t changed your estate plan, your soon-to-be ex-spouse could wind up with complete control over your life and assets.
To avoid this, here are 5 changes to make to your estate plan when getting a divorce:
1. Change Your Power Of Attorney Documents
Unless you want the person you are removing from your life to make all of your legal, financial, and medical decisions in the event of your incapacity, you need to update your power of attorney documents as soon as the divorce is inevitable. A financial power of attorney allows you to grant an individual of your choice the legal authority to make financial and legal decisions on your behalf should you become unable.
2. Change Your Beneficiary Designations
As soon as you know you are getting divorced, you should update the beneficiary designations for assets that do not pass through a will or trust. This includes: insurance policies and retirement plans. If you get remarried following your divorce but you haven’t changed the beneficiary of your 401(k) to name your new spouse, the ex you divorced 10 years ago could end up with your retirement account upon your death. And if naming new beneficiaries is not an option for you now, once the divorce is finalized it should be your number one priority.
3. Create a New Will
You should create a new will as soon as you decide to get divorced. Because most married couples name each other as their executor and the primary beneficiary of their estate, it’s important to name a new person to fill these roles as well. You most likely need to name new beneficiaries for any assets that you’d previously left to your future ex. And sometimes your old will isn’t automatically revoked once the divorce is final either. State laws vary widely in regards to how divorce affects a will. Given the uncertain legal landscape, it’s important to be advised correctly on how to proceed.
4. Amend Your Existing Trust Or Create A New One
If you have a revocable living trust, you’ll want to update it too. Like wills, the laws governing if, when, and how you can change a trust during a divorce can vary, so you should consult us as soon as possible if you are considering divorce. If you don’t have a trust in place, you should seriously consider creating one, especially if you have minor children. Trusts provide an array of benefits that are unavailable with a will, and they’re particularly well-suited for blended families.
5. Revisit Your Estate Plan Once Your Divorce is Final During the divorce process, your primary objective is limiting your soon-to-be ex’s control over your life and assets should you die or become incapacitated before divorce is final. For this reason, the individuals to whom you grant power of attorney, name as trustee, designate to receive your 401(k), or add to your estate plan in any other way while the divorce is ongoing are often just temporary. Once the divorce is final and your marital property has been divided up, you should revisit all of your estate planning documents again and update them accordingly based on your new asset profile and living situation.
Although it may seem like something at the bottom of your priority list. It truly can’t afford to wait. Sometimes waiting can legally make it impossible to change certain parts of your plan.
Meet with us today to learn more. We are here to help at Truest Law!