How does a divorce affect your estate plan?
Planning an estate is essential for protecting your assets, ensuring your wishes are carried out, and relieving your loved ones of unnecessary burdens. When it comes to divorce, modifying your estate plan is something you cannot afford to overlook. A divorce proceeding is difficult in and of itself, but your estate plan should reflect the changes in your life.
Some of the documents that should quickly be revamped include your health care proxy and your will or trust. If your ex-spouse was listed as the agent in a health care proxy, that appointment is revoked by law when the divorce becomes final; however, you need not wait to name a new proxy. In any case, a new agent needs to be appointed to make healthcare decisions should you become incapacitated.
As for your Will, if you appointed your ex-spouse as executor, a sibling, a parent or a financial agent can assume that role to ensure minor children receive any inheritance you had planned for them. In some cases, the divorce agreement may even require the establishment of a trust for the children. You will also need to name a new durable power of attorney so that your former spouse is not appointed the agent of your financial matters. In addition, the beneficiaries of any life insurance policies, retirement plans and other financial accounts will also need to be updated.
While many of these documents cannot be finalized until the divorce is settled, consulting an estate planning attorney during the divorce proceeding can help you make plans in advance and address any issues that may affect your estate.
Whether your divorce proceeding is ongoing or has been settled, it is essential to ensure that the decisions made during the divorce will carry over to your estate plan. In some cases, a divorce agreement may also require you to designate your ex-spouse as a beneficiary on an insurance policy. Other financial agreements included in a divorce settlement may also affect your new estate plan.
In addition to protecting your assets, it is important to get your affairs in order as you enter the next phase of your life. If you are contemplating a divorce or have reached a settlement, you should engage the services of a qualified estate planning attorney.