So, you’re officially divorced. In starting this new chapter of life, you should update your estate planning documents as soon as possible. You may no longer be legally married, but divorce does not automatically remove your prior spouse from your beneficiary designations or as a decision-maker. Here are some items to consider updating:
Change Your Advance Directives
When you engage in estate planning, it is standard to complete forms such as a health care proxy or living will. Often, spouses will choose each other as their agents for making health care decisions if they become incapacitated. After a divorce, your ex may be the last person you want handling these matters. Change your documents to appoint someone you trust.
Update Your Power of Attorney
Another document you may have previously executed is a power of attorney. This can give another person a great deal of control over your assets and personal and financial affairs. If your current power of attorney names your prior spouse as your agent, you can revoke it and sign a new one choosing a different person to act as your agent.
Amend Your Will and Trust
Many couples designate their partner as the executor of their will. Your ex may also be listed as a beneficiary of your will. It is important to review and amend your will now to make changes. The same goes for any trust you may have created.
Guardianship of Your Minor Children
If you have concerns about your prior spouse’s ability to be a guardian to your minor children, there may be steps you can take to mitigate any instability a divorce may have brought to the situation.
One option is to set up a trust for your children that will protect assets from being irresponsibly depleted. Life insurance amounts or other assets placed in a trust will be managed by a person whom you can name as trustee even if the other parent becomes the legal guardian. A trust will prevent the other parent, who could otherwise be in control of minor children’s finances, from accessing certain funds.
Be Aware of What Insurance You Are Required to Maintain
Many divorce settlements set forth that one spouse maintains life insurance and specifies who shall be a beneficiary of the policy. You should ensure your current life insurance policies not only comply with your divorce agreement, but also are not in danger of lapsing.
The same goes for medical insurance. If you are required to maintain medical insurance in a certain manner, review your plan to ensure the correct parties are covered and that it is in good standing.
Failure to comply with your divorce agreement can cause you to wind up back in court.
Review Your Beneficiary Designations
If you are not required to maintain your ex as a beneficiary on your life insurance or retirement accounts, now is the time to update your designations. You should contact your insurance company, bank, financial advisor, retirement (including pension, 401K, and IRA) administrator to make these changes. Upon your passing, the funds will go to whomever is listed as a beneficiary, regardless of a divorce proceeding.
Review Your Estate Plan
We recommend reviewing your estate plan every 4 to 5 years to ensure that your plan is consistent with your current wishes. However, in the event of major life changes, such as death, birth, disability, or divorce, we recommend not waiting to update your doccuments.
Our office is ready to assist you with all your estate planning needs. Contact us today to get started.