Divorce is never easy. Adding the complexities of estate planning can make it harder. However, it still needs to be included during the divorce process, says a recent article entitled “How to Change Your Estate Plan During Divorce from the Waco Tribune-Herald.
According to another timely article in the Florida Bar Journal, there are numerous issues to consider with divorce. If you are seriously contemplating a divorce, if you are in the midst of a divorce, or if you are divorced you must revisit your estate plan. Of course, if you don’t have an estate plan then you need one right Now.
Some of the key things to bear in mind during a divorce include:
Is your Last Will and Testament aligned with your pending divorce? The unexpected occurs, whether planning a relaxing vacation or a contentious divorce. If you were to die in the process, which usually takes a few years, who would inherit your worldly goods? Your ex? A trust created to take care of your children, with a trusted sibling as a trustee?
Are your beneficiary designations up to date? For the same reason, make sure that life insurance policies, retirement accounts, and any financial accounts allowing you to name a beneficiary are current to reflect your pending or new marital status.
Health Care Directives. The will is far from the only document to be changed. If you are in the middle of an ugly, emotionally charged divorce, the last person you want to make life or death decisions as your health care proxy is your soon-to-be ex.
Durable Power of Attorney. Upon the filing of a divorce petition, if your spouse was named as the agent in your Durable Power of Attorney his or her authority to act on your behalf terminates immediately. The idea is that during the pendency of the divorce, your spouse would be unable to act on your behalf as it relates to your property.
It’s a good idea to update your Health Care Surrogate, Durable Power of Attorney, and Living Will Declaration documents during the divorce process. All of these documents are used to name people who will act on your behalf, in the event of incapacity.
Certain changes may not be made until the divorce is finalized. For instance, there are laws concerning spouses and pension distribution. You might not be able to make a change until the divorce is finalized. If your divorce agreement includes maintaining life insurance for the support of minor children, you must keep your spouse (or whoever is the agreed-upon guardian) as the policy beneficiary.
Once the divorce decree is accepted by the court, the best path forward is to have a completely new will prepared. Making a patchwork estate plan of amendments can be more expensive and leave your estate more vulnerable after you have passed. A new will revokes the original document, including naming a personal representative and a guardian for minor children.
Talk with your estate planning attorney and let him or her know you’re going through the divorce process. They will be able to make further recommendations to protect you, your children, and your estate during and after the divorce.
Reference: Waco Tribune-Herald (Oct. 18, 2021) “How to Change Your Estate Plan During Divorce”