When Joe and Becky divorced last year, neither thought about changing their shared estate plan. And who could blame them? Divorce isn’t easy. It’s life-altering, and beyond the emotions that come with the dissolution of a marriage, there is a litany of to-do items that need to be checked off — some stay top of mind no matter what (children, division of assets, etc.), and others get lost in the shuffle. The reality, however, is that divorce and estate planning don’t mix well when you forget to account for these significant life changes.
If your divorce is final, it’s important to visit with your estate planning attorney to rethink how your existing plan is structured. That typically means shredding every document and starting from scratch because the last thing you want is for a former spouse to gain control over assets or receive unintended benefits that should go to your children or a new spouse if you get remarried in the future.
There is a lot that goes into divorce and estate planning, but a few of the documents you’ll need to look at include the following:
• Power Of Attorney
• Life insurance
• Financial accounts
Divorce and Estate Planning — 4 Key Moves to Make
Divorce is a significant and life-changing event for any family. And while your friends here at Caitlyn Ashley Law in Denton, TX, wish for everyone to have a healthy marriage that lasts a lifetime, reality doesn’t always work out that way. So if you already have wills, trusts, etc., set up from when you were married, you must make a few key moves right now.
1. Create a new will and trust and destroy the old ones — There are a few smaller estate planning changes that you and your attorney can make without having to start from scratch. Accounting for divorce isn’t one of those options. Therefore, you’ll need to draft a new will and trust so that any decisions made after you are gone reflect your current wishes and remain as smooth as possible.
2. Change beneficiary designations — Your beneficiary list should include people you want to inherit your property and assets. Review your will and trust, but don’t forget retirement accounts, life insurance policies, annuities, IRAs, pensions, investment accounts, etc. You can get change of beneficiary forms from the appropriate financial institutions and insurance companies.
3. Update payable on death designations on bank accounts — Go through every checking and savings account you have at your bank and update the payable on death designations. This way, those funds will go to the appropriate person if you pass away unexpectedly.
4. Revoke powers of attorney and healthcare directives — Another critical divorce and estate planning tip is to ensure that your former spouse is no longer the attorney-in-fact on a POA or the primary point of contact for healthcare directives. Revoke these powers as soon as your divorce is final, and work with your attorney to draft new documents.
Depending on your unique situation and family dynamic, additional divorce and estate planning steps may be needed after a divorce. Sitting down with your attorney every 2-3 years to review what is already in place can uncover anything from a minor change that should be accounted for sooner rather than later to significant issues such as divorce that need to be resolved now.
Call Caitlyn Ashley Law today!!
Having a plan for the future is the most important gift you can give yourself and your family. Granted, none of us will ever know for sure what is around every corner in life. And just thinking about the what-ifs — what if I were to die or become incapacitated tomorrow; what if my child with special needs has no one to care for her; what if all my “stuff” isn’t passed onto the right people — can be overwhelming. But having a plan that accounts for your family’s unique circumstances, puts your affairs in order, has concrete solutions to your concerns, lays out your wishes and goals, and protects your family’s future provides peace of mind for the road ahead.
Caitlyn Ashley Law in Denton, Texas, will counsel you on which documents are best suited for your needs and ensure they are flexible enough to meet your changing needs for years to come.