by Debra Schoenberg
If you are beginning the process of getting a divorce, it’s important to review and revise your estate plan to make sure it is updated before the process is complete. Many people think of an estate plan as a will or something that you will only need when you pass away, but that is not entirely true. Having a good estate plan can protect you and your assets if you become incapacitated, can’t make decisions for yourself, or in this case, if you decide to go through the divorce process. The plan consists of several documents, including a will, a power of attorney, and a living trust, and it’s important to take proactive steps to update your plan, as a divorce can bring big changes to your finances, assets, and planning objectives.
If you have a living trust, it’s likely that it was a joint trust with your former spouse. It is important to seek the assistance of an experienced attorney to guide you through the process of revoking the joint trust and executing a new will and trust. Your will is likely one that you and your former spouse made together. Following your divorce, your estate has undoubtedly changed dramatically, which is why updating your will and trust is more important than ever. Forgetting to remove your former spouse from your will after the divorce is final can complicate matters in respect to how your property is distributed according to your final wishes and your estate could likely end up in expensive litigation.
According to The Wealth Advisor, a major part of post-divorce estate planning is changing beneficiaries. You can request to change the beneficiaries for all retirement accounts including IRA, 401(k), 403(b), and life insurance policies. Having your former spouse still listed as a beneficiary of an IRA or life insurance policy could lead to problems in the event of your death. As with a will, a new living trust should also be created after a divorce. If you have minor children, you will be required to name a Trustee to handle the funds for your children until they become adults and your ex-spouse can be prevented from controlling their assets.
Following the divorce process, it is important to update your power of attorney because failing to do so can lead to serious consequences to your finances. According to Legal Zoom, a power of attorney is a document that allows you to appoint a person to manage your property, financial, or medical affairs if you become unable to do so. If you have appointed your former spouse as your power of attorney, you should immediately execute a document revoking the status and deliver a copy to all of your financial institutions. Businesses and organizations that are not made aware about a revocation cannot be held legally liable for any actions taken based on the power of attorney they possess.
Divorce can be a very messy and emotional process, and it is vital for anyone going through a divorce to know what to expect in terms of how the change will affect their estate plan. Having a revised estate plan will help to ensure that your loved ones and beneficiaries receive appropriate portions of your estate after your death. According to Forbes, having an estate plan doesn’t mean that the job of protecting your family’s future ends, and chances are your personal and financial situation will change as time passes. Reviewing your plan at regular intervals in addition to major life events will help ensure that your legacy is passed on according to your wishes.
