Divorce complicates both relational and financial matters.
Most people going through a divorce focus on the immediate impact of the separation.
They think about how to divide assets, account for child support, and arrange custody of children.
Although these are undoubtedly time-sensitive concerns, couples must also consider estate planning changes.
When the court petitions, mediations, and filings associated with the divorce are complete, many people forget to update their estate planning documents.
This misstep can lead to the former spouse inheriting or being in charge of important medical and financial decisions.
Yikes!
Estate planning should be prioritized after divorce.
Divorce involves significant changes to finances and relationships.
Divorce can derail your current plans because people and possessions are both key components of estate planning.
Many people who set up their estate planning documents when married will choose to have their spouses serve as power of attorney or make them primary beneficiaries.
Failure to review and update your plan after a divorce means your ex could inherit your assets, make your medical decisions, or manage your finances during an emergency.
After divorce, your last will, trust, beneficiary designations on retirement accounts or life insurance policies, and powers of attorney must be reviewed and changed.
By working with an experienced estate planning attorney to alter your plan in a legally valid manner, you can protect yourself and your assets from your ex.
Many people mistakenly believe divorce will nullify your original estate plan and disqualify your ex from inheriting.
This is not necessarily true.
If your last will or trust documents continue to list your ex as the executor or primary beneficiary, your ex may still control and inherit your property.
To update your estate planning document, you must revise your last will to appoint new executors and beneficiaries.
If you have a revocable living trust, you should revoke or amend it to remove the former spouse.
Ultimately, you must work with an experienced estate planning attorney and review the laws of your state because some states may void spousal provisions after a divorce, and others will not.
Neglecting to update your estate plan appropriately could lead to distributions contrary to your current wishes and to avoidable legal battles.
Several assets pass outside a last will and are distributed to heirs through beneficiary designations.
Because these documents supersede your last will provisions, you must carefully review and update these designations after a divorce.
What documents must be addressed?
You should locate jointly held assets or real estate with right of survivorship, transfer of death (TOD) accounts, payable on death (POD) accounts, life insurance policies, and retirement accounts like IRAs and 401(k)s.
What happens if your former spouse remains on these accounts?
Your ex could still receive the assets despite the divorce decree.
The safest way to ensure your assets end up in the hands of your desired beneficiaries is to review and update your plan.
People do not typically divorce because they trust their spouses.
If you do not believe your former spouse cares about your best interests, then they should not be given the authority to make financial or medical decisions on your behalf if you become incapacitated.
What steps should you take to replace your ex with someone you trust?
You should review your power of attorney for finances and name a new attorney in fact (i.e., agent).
You must designate a different healthcare agent to make your medical decisions.
While at it, revise your advance directives to align with your current wishes.
If your ex retains control of these decisions in times of crisis, you could find your health and finances compromised.
In addition to addressing the immediate concerns associated with divorce, you must prepare for the future by updating your estate planning documents.
You can protect your loved ones and assets by reviewing and updating your last will, trust, powers of attorney, and beneficiary designations.
If you are looking for an experienced estate planning attorney to create a plan to meet your current needs, request a consultation with our Overland Park estate planning law office.
Foundational estate planning documents like your last will or revocable living trust should be reviewed and updated after a divorce.
It is essential not to overlook beneficiary designation on assets like bank accounts, life insurance policies, and retirement accounts.
Incapacity planning should be addressed by naming trusted individuals to serve as agents to manage your finances and handle your healthcare decisions in a crisis.
Immediately following your divorce, you should work with an experienced estate planning attorney who understands your state laws to protect you, your loved ones, and your property.
This post is for informational purposes only and does not provide legal advice. You should contact an attorney for advice concerning any particular issue or problem. Nothing herein creates an attorney-client relationship between Harvest Law KC and the reader.
References: Investopedia (June 25, 2024) “Rewriting Your Will After Divorce” and Justia (September 2024) “Estate Planning After Divorce”
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