After the divorce, it is important to review and update your estate planning elements, including your will, any trusts, power of attorney, life insurance beneficiaries, and your other financial accounts. When updating your estate plan after divorce, you can do it yourself, use an online legal service, or hire an attorney. If you pass away before updating your estate plan, there may be laws in your state that dictate what happens to your assets. Some parts of your estate plan, including life insurance beneficiaries, may be determined by your divorce decree, especially if you have children or are responsible for spousal support.
Updating Your Estate Plan After Divorce
If you and your ex-spouse created an estate plan together during your marriage, you likely have an idea of what it includes. You will need to update many of the same components you created during the marriage once you are divorced.
When Can You Update Your Estate Plan?
When going through a divorce, you may feel the need to remove your spouse from all parts of your estate plan, but state laws may limit your ability to do so immediately.
Do You Need a Lawyer to Update Your Estate Plan After Divorce?
Some may feel overwhelmed when creating an estate plan, and dealing with additional legal documents during or after divorce may feel frustrating. The good news is that updating your estate plan doesn’t have to be difficult.
The Will
When people think of estate planning, they often think of the will first, as it should be part of every estate plan. It is a legal document that allows a person to specify what they want to happen to their property and assets upon their death.
The Trust
A trust is an estate planning tool used to hold property or assets for the benefit of a third party. Trusts are often used as an estate planning tool to pass assets to beneficiaries. For example, your will may state that instead of passing the assets directly to beneficiaries, you will transfer them to the trust and ultimately pass them on to the beneficiaries in a specified manner.
Power of Attorney
A power of attorney (POA) is another legal document that is part of many estate plans. Rather than taking effect after your death, the power of attorney is used in the event you are unable to make your own decisions.
Life Insurance
Life insurance is an important and straightforward part of your estate plan that should be updated after divorce. If you fail to change your beneficiary from your ex-spouse and pass away thereafter, your ex-spouse could receive those funds. The good news is that changing your life insurance beneficiary is very simple. In most cases, you only need to contact your insurance company and complete a new beneficiary form.
Financial Accounts
Financial accounts, including bank accounts and investment accounts, can be passed on in various ways. They can be part of your estate and distributed according to the instructions in your will. Financial accounts can also have designated beneficiaries, meaning your assets can pass directly.
Minor Child Custody
When considering minor child custody after divorce, if applicable, Berger suggests trying to make the process as practical as possible. “One thing I always tell my clients, especially regarding appointing who will care for your children, is that if you are changing it, you are doing so for the right reasons,” said Berger. “Not because you are divorcing your spouse. It’s because you don’t believe that person will raise your children in the way you would like.”
Consider the Estate Plan Before Finalizing the Divorce
It is recommended that…
Experts are waiting for the divorce to be finalized to update the estate plan
Source: https://www.thebalancemoney.com/estate-planning-documents-to-update-for-divorce-3993981
Leave a Reply