3 Tips for Estate Planning After a Divorce
Divorce is a life-changing experience on a personal level, but it can also have a huge impact legally and financially. After the divorce process is through, there is still the very important matter of your estate plan. Chances are, as a married couple, you and your spouse shared an estate plan for your joined assets. Once you’re divorced, it is crucial that you have those documents altered.
Once you’ve finalized your divorce, you should take the following steps to protect your assets and revise your estate plan.
1. Revoke Your Previous Will
While you could revise your existing will, it’s likely you and your ex-spouse wrote your will together. For this reason, it is often easier to simply revoke your existing will and execute a new one. While you should destroy your own will, you may also state in your new will that you revoke all prior wills, making them invalid. In your new will, you should designate who will receive your properties and assets, as well as who will be the guardian of your minor children should something happen to you.
2. Rename Powers of Attorney
Most married couples designate one another with medical and financial powers of attorney. You will want to change the medical power of attorney as soon as possible, perhaps before your divorce is even finalized.
- A medical power of attorney is someone who makes medical decisions for you if you should become incapable of doing so.
- A financial power of attorney is someone who manages your finances if you become incapacitated and cannot make financial decisions yourself.
You can revoke these power of attorney documents and execute new ones to appoint another family member or trusted friend as your agent. When drawing up a new power of attorney documents, you may choose the same person for medical and financial authority, or designate a different person for each. Be sure to notify your healthcare provider of your new medical power of attorney.
3. Change Beneficiary Designations
A will may effectively distribute your properties, but some of your most valuable assets might not be fully covered by a will. If you have a life insurance policy, retirement accounts, health savings account, investment account, or anything else that asks you to name a beneficiary, you will likely need to make some changes. Chances are, you named your spouse as your beneficiary on most, if not all, of these accounts. If your spouse is designated as a beneficiary, it may not be enough to appoint ownership of those accounts within your will, instead, you should change the beneficiary for all your accounts and policies directly. To avoid contestation or other issues, you should ask each account holder for the appropriate documents and rename the beneficiary.
Whether you were married for 2 years or 20, going through a divorce is difficult. When a couple must divide their shared properties and assets after combining them in their marital union, finding a way to fairly separate those assets can be a hard-won battle. After going through all the difficult aspects of divorce, take the time to protect your assets after the divorce is finalized by updating your estate plan. While these tips can steer you in the right direction as far as changing your will and powers of attorney, there are many complex issues that could come up depending on your situation, especially when children are involved. Contact your family or estate planning attorney for individualized advice.