No one likes to get divorced. Even worse is getting divorced when it hurts your estate plan. To learn about this one (of the many) consequences of divorce, keep reading.
Estate Planning When Divorce Is Pending
So, you’re on the brink of divorce. It’s more common than it used to be, but it does have consequences, including for your estate plan.
A divorce doesn’t automatically do away with an estate plan. Your marriage may be about to end, but your estate plan doesn’t have to. You’ll have to keep your future ex-spouse out of your estate by taking action.
Do away with any power of attorney that you and your spouse may have executed during your marriage. Also, check your will. Your ex-spouse may be due for their share of your estate or they might be in control of the whole thing.
If your spouse dies before your divorce is finalized, you’d receive an inheritance through their will. Without a will in that scenario, you’d get the whole estate if there aren’t any children from another relationship. Even if there are, you’d still get at least half of the estate.
Let’s also consider life insurance. Sometimes you’ll have to keep paying life insurance according to the terms of the divorce agreement. If you don’t, you could have a lawsuit on your hands. So, if you don’t like the life insurance obligations as laid out in your divorce agreement, legally change them.
Post-Divorce Estate Planning
After divorce, there’s the matter of a health care proxy. This lets you choose someone to make medical decisions on your behalf if you couldn’t communicate in the event of a health emergency or if you were in a car accident. If you don’t want your ex-spouse to be your health care proxy, then you’ll have to update that.
You’ll also need to take a second look at your beneficiary designations. Do you still want your ex-spouse to be the designated beneficiary of your retirement account, life insurance policy, or brokerage account? You have money, and you have the power to determine to whom it will go.
As a rule of thumb, your post-divorce estate plan should fall in line with all other legal documentation under your name. Separation, prenuptial, and postnuptial agreements should all reflect the terms of your estate plan. That means they should fully reflect all of your post-divorce financial plans.
Divorced With Kids
The kids matter, too. If your children are still minors, then a huge part of the estate plan is who looks after them if you pass away. Do you still want your ex-spouse looking after them after your divorce?
You’ll need a trust for any minor children. Without a trust for minor children (and with your ex-spouse as their guardian), your dreaded ex-spouse will control your children’s money until they turn 18. If you don’t want that to happen, then you’ll need a revocable trust that will allow a trustee of your choice to manage your children’s money if you pass away.
The Unavoidable Consequences of Divorce
Whether you like it or not, there are consequences of divorce that you can’t avoid. The good news is that with the right estate planner, your divorce won’t be so painful.
For painless adjustments to your post-divorce estate plan, contact Boyer Law Firm today.