Divorce and Estate Planning Checklist
What happens to your estate plans when you get separated or divorced? Nearly half of all couples in America will divorce. This is an extremely emotional, stressful, and overwhelming time. The divorce to-do list can seem never-ending, but it is important to ensure that your estate planning doesn’t fall behind.
Divorce and Estate Planning
Divorce does NOT necessarily negate spousal rights under estate laws. While an estranged spouse has certain rights under the law, an existing estate plan (or no estate plan) may provide that spouse with more access and control than is legally required. For this reason, we highly advise separated or divorced spouses to meet with their estate planning attorneys and ensure that all of the legal needs are addressed.
Revise Will and Trusts
If you separate or divorce, it is important to revise your will and any trusts. Ensure that you update your beneficiary and that everything reflects your current wishes. If you do not have a will, GET ONE! If you die without a will, your spouse could inherit everything. Preparing a will gives you control over what happens to your estate after your death.
Update Life Insurance Beneficiary
Life insurance is one those financial decisions where people typically name their spouse as beneficiary, pay the premiums, and forget about it. However, in the event of separation or divorce, you should update your beneficiary unless you want your spouse to be able to collect your life insurance policy.
Estate Planning with Minor Children
Unless otherwise specified, an inheritance of a minor child will be held by the guardian of that child until he/she turns 18. Typically, courts name the surviving parent as guardian, which gives that spouse control over the inherited funds. If there are reasons that an ex-spouse should not have access to or authority over the inheritance, you need to designate someone else to manage those funds. This could be a custodian (for management until 18) or a trustee (for management of the funds for a longer period).
Update Financial Power of Attorney
If an estranged spouse is name as an agent under a power of attorney, he/she has authority over accounts, property, and other assets subject to the power of attorney. This can be very troublesome. To prevent this from happening, the power of attorney must be affirmatively revoked.
Update Health Care Power of Attorney
Imagine separating form a spouse under unfriendly circumstances. One spouse is in a tragic accident and the doctors need important life or death decisions made. If the other spouse is named as health care agent under a health care power of attorney, he/she has the legal authority to make life or death decisions for the injured spouse. Would you want your ex-spouse making those decisions? If not, you need to ensure that your health care power of attorney is updated.
Need Help with Divorce and Estate Planning?
Careful thought must go into your estate planning after divorce or separation. Understanding the implications of existing estate planning documents, or the lack thereof, is the first step. For help with your estate planning after separation or divorce, please contact the estate planning attorneys at King, Campbell, Poretz & Mitchell.