If you’re in the midst of a divorce, you know what an overwhelming experience it is. Divorce disrupts every facet of life, including your estate plan. Yet, when you’re dealing with emotional and difficult issues involving your kids, your finances, your home, your family and social connections, it’s understandable that updating your estate plan can fall to the bottom of your priority list.
But divorcing couples must keep that estate plan update as a high priority — not once the divorce is final, but as soon as you know a split is coming. Failing to update your plan exposes you to a number of potentially tragic consequences that divorce lawyers often don’t mention. Remember that until your divorce is final, your marriage is legally in full effect.
This means that if you die or become incapacitated while your divorce is ongoing, and you haven’t updated your estate plan, your soon-to-be ex-spouse could have complete control over your life decisions and assets. Given that you’re ending the relationship, you probably wouldn’t want him or her to have that much power. And since we can’t know when tragedy will strike, you have to take action quickly.
While state laws can limit your ability to make certain changes to your estate plan once your divorce has been filed, here are a few of the most important updates you should consider making as soon as divorce is on the horizon.
1. Update your power of attorney documents
If you were to become incapacitated by illness or injury during your divorce, the very person you are paying big money to legally remove from your life would be granted complete authority over all of your legal, financial, and medical decisions. That’s why it’s vital that you update your power of attorney documents as soon as you know divorce is coming. Your estate plan should include both a durable financial power of attorney and a medical power of attorney.
2. Update your beneficiary designations
As soon as you know you are getting divorced, update beneficiary designations for assets that do not pass through a will or trust, such as bank accounts, life insurance policies, and retirement plans. Failing to change your beneficiaries could result in your assets transferring to an ex-spouse or others you no longer have in your life, depending on your current designations.
3. Create a new will
Creating a new will cannot wait until after your divorce. You need a new will as soon as you decide to get divorced because you may not be able to change your will once divorce papers are filed. Most married couples name their spouse as executor of their will and the beneficiary of their estate, so it’s important to name a new person to fill these roles as well.
4. Amend your existing trust or create a new trust
If you have established a revocable living trust, you’ll want to review and update that, too. Like wills, the laws governing if, when, and how you can alter a trust during a divorce can vary, so you should consult us as soon as possible if you are considering divorce. In addition to reconsidering what assets your soon-to-be-ex spouse should receive through the trust, you’ll probably want to replace him or her as successor trustee, if they are so designated.
And if you don’t have a trust in place, you should seriously consider creating one, especially if you have minor children. Trusts provide a wide range of powers and benefits unavailable through a will, and they’re particularly well-suited for blended families. Given the possibility that both you and your spouse will eventually get remarried—and perhaps have more children—trusts are an invaluable way to protect and manage the assets you want your children to inherit.
By using a trust, for example, should you die or become incapacitated while your kids are minors, you can name someone of your choosing to serve as successor trustee to manage their money until they reach adulthood, making it impossible for your ex to meddle with their inheritance.
Beyond this key benefit, trusts afford you several other levels of enhanced protection and control not possible with a will. For this reason, you should at least discuss creating a trust with an experienced estate planning lawyer before ruling out the option entirely.
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It’s vital that you make the time to create or update your estate plan during this trying period in your life. If you or someone you know is facing a divorce, please book a call with our Client Services Coordinator, who can answer your questions and set a time to meet with one of our attorneys immediately.
We’ll help walk you through every step with sensitivity and support.