If you are facing or have recently gone through a divorce, you have a lot of changes to navigate. Estate planning may not be at the forefront of your mind, but it’s important to make the right changes to protect your assets as you move into the next chapter of your life. This guide will help you understand how divorce affects estate planning.
7 Steps for Updating Your Estate Plan After Divorce
A divorce can impact your financial priorities, including your plans for your estate after your death. Follow these seven steps to ensure your wishes are known and respected.
1. Revise Your Will
Many people include their spouse as the executor or a beneficiary of their will. A beneficiary is anyone who will gain from your estate upon your passing. An executor is the person in charge of carrying out your will properly.
If you drew up your current will with your ex-spouse in mind, you may want to update it now. For example, if you named your ex-partner as your executor or beneficiary, you may want to remove them and reallocate any gifts you previously intended for them. You should also consider whether your divorce impacts who should be named as a guardian for your children.
You might prefer to leave your will as it is, but it’s worth reviewing it to see whether you want to change anything. State laws may automatically change your designations after divorce if you do not update your will, so check and revise your will as necessary to ensure your wishes are conveyed. Date your revised will with a current date, even if you are not making changes, to show that this document reflects your post-divorce wishes.
If don’t have a will yet, now is the perfect time to create one with your new priorities in mind.
2. Update Your Health Care Power of Attorney
A health care power of attorney is a person you designate to make health-related decisions on your behalf if you are incapacitated. This should be someone you trust to represent your values and best interests. Many appoint their spouses. Consider designating a new power of attorney if you no longer want to entrust that role to your ex-spouse.
3. Review Beneficiaries and Powers of Attorney
Confirm whom you’ve listed as beneficiaries for every part of your estate, including:
- Your will
- Any trusts
- Life insurance policies
- IRA and 401(k) retirement accounts
- Any pay-on-death bank accounts
- Any transfer on death investment accounts
If your ex-partner is a beneficiary of any of those accounts, you may want to remove them. You should also consider whether you want your ex to retain any financial or medical powers of attorney you previously gave them. Even if you choose not to make changes, sign new forms with the current date so the state recognizes that you made or confirmed these decisions after your divorce.
To avoid unnecessary litigation over your estate, ensure there is no conflict between your will, account beneficiary designations, and divorce agreement.
4. Consider a Trust
If you have a trust, you should review its beneficiaries in the previous step. If you don’t have one, consider setting one up now to protect your assets. A trust allows you to specify distribution plans for alimony, child support, inheritance, and guardianship of your children after you pass away. You can appoint a trustee to manage assets for the benefit of your children after your death.
5. Revisit Guardianship Arrangements
Depending on the reasons for your divorce and your current relationship with your ex-partner, you may have valid concerns about them becoming the primary caregiver for your children after your death. Based on your present custody arrangements, your ex-spouse’s relationship with your children, and the findings of a custody court, you may not be able to prevent your spouse from gaining custody after your death. However, if you have serious concerns, you can express these and allow a judge to review them if you pass away while your children are still minors.
6. Check Prenuptial or Postnuptial Agreements
Inspect your prenuptial or postnuptial agreement to understand whether your ex-spouse is entitled to anything. You will need to take this into account when planning your estate.
7. Understand Your Life Insurance Policy
Check your life insurance policy to confirm who is responsible for and will benefit from it. You may want to update these terms if your ex-spouse is still listed as a beneficiary.
Divorce and Estate Planning FAQs
As you think about your estate plans and begin working through the steps to update them, you may have some questions. Here are answers to a few of the most common.
What Happens if I Don’t Update My Estate Plan?
If you don’t update your estate plan after divorce, your current will remains valid, except for any automatic changes resulting from state law. Each state has its own laws in this regard. Many disinherit your ex-spouse if you pass away after a divorce without updating your estate plan, while others don’t. This means failing to update your estate planning documents can lead to one of three scenarios:
- Your ex-spouse could inherit when you would prefer them not to.
- Your ex-spouse could lose the inheritance that you intend for them.
- The next person in line after your ex-spouse could inherit assets you intended for someone else.
Avoid these problems by updating your documents with the help of an estate planning attorney.
What Happens to a Trust in a Divorce?
What happens to a trust after a divorce depends on the type of trust and the law in your state. Your ex-partner will remain the beneficiary of an irrevocable trust after divorce, but many states will remove them as a beneficiary of a revocable trust at your death.
Speak to an estate planning attorney about updating a trust after divorce. You can choose to keep or remove your spouse as a beneficiary, but the process for removing them differs between revocable and irrevocable trusts.
What Happens to Life Insurance After Divorce?
Whereas many states automatically disinherit a divorced spouse from your will if you do not update it, most will leave them as the beneficiary of your life insurance. If you want someone other than your ex-spouse to benefit from your life insurance policy at your death, speak to your insurer about making that change. Note that your divorce agreement may obligate you to keep them as a beneficiary, so check that first.
Contact Crow Estate Planning & Probate to Update Your Plans
Estate planning can be complex, especially while going through all the other changes that come with a divorce. Experience peace of mind knowing that your legacy will benefit those you intend it for by partnering with Crow Estate Planning & Probate. If you live in Tennessee or Kentucky, our experienced estate planning lawyers will help you create an updated, personalized, and comprehensive estate plan after your divorce.
Contact us today for a free consultation and get help with estate planning after divorce.
