Divorce can have short term effects and a long-lasting impact on both the couple and their children. The process is usually associated with trauma, strained relationships, emotional problems and financial stress. Divorce can also affect estate planning, disrupting both your present-day life and your future plans.
Here are some of the changes you may need to make once your divorce has been finalized:
Power of Attorney and Advance Directives
Part of estate planning involves signing a durable general power of attorney, health care power of attorney, and advance directives. These important documents allow you to appoint someone to handle your legal and financial affairs and make medical decisions. An advance directive contains your wishes in the event you are in a vegetative state.
Draft a New Will
To express how your property will be distributed and how your minor children will be cared for after your death, you can revoke your old will and have a new one drawn up. This allows you to state whether you will leave money and property to your ex and appoint your executor or administrator. It may also be necessary to retitle the assets you own jointly with your ex-spouse.
Update Your Beneficiary Designations
There are certain assets that will not be included in your will. However, you will still need to decide what happens to them in the event of your death. These include retirement accounts, life insurance, bank accounts, investment accounts, and other financial assets. After a divorce, you may need to update the relevant documents and name another beneficiary.
Revisit Documents Relating to Trusts
A good number of couples set up joint trusts or name their spouses as trustees to oversee their trusts when they pass on. After a divorce, you can consider creating a trust for purposes of estate planning. People who have already set up a revocable living trust for themselves or a trust for their children may have to revisit the relevant documents during or after a divorce. If you do not update the trust, your ex may end up controlling or owning your assets.
Name a Legal Guardian for Minor Children
When children are involved, one of the parents typically ends up becoming their guardian. You may wish to think about ways of keeping your ex-partner from controlling the assets you leave to your children. In addition, you should name a legal guardian for minor children in case your spouse predeceases you and something happens to you.
After a divorce, it is important to make sure that your estate plan reflects your new circumstances. Considering the monumental impact of a divorce, you should consult your divorce and estate planning attorney before making any changes. At Bergman Family Law, I have experience dealing with divorce, post-judgment modifications, alimony, child support, prenups and domestic violence.
What estate planning documents will I need to update after divorce?
The primary documents you need to revisit after a divorce are your will, financial power of attorney, medical power of attorney, and trust. However, this will depend on your specific circumstances.
Will estate tax planning be different after divorce?
Yes. The good news is that you can re-align your estate plan in a way that can help reduce the tax bill when you pass away.
Will re-marrying affect my estate planning?
Just like divorce, remarriage is a significant life event. You may have to update your will or trust to outline how your property will be distributed.
Do I have to get my ex-spouse’s consent to make a new will or trust?
No. When it comes to estate planning, you will be treated as a single person. You will only need to get consent if you have a contractual will.