How Divorce Affects Estate Planning

Among the many things you need to address after your divorce, reviewing and updating your estate planning documents, including wills, trusts, and beneficiary designations, should be at the top of your list.

Your plans for how your assets will be distributed after your death have undoubtedly changed after the end of your marriage, and failing to revise your previously existing instructions could lead to your ex-spouse inheriting assets or receiving life insurance benefits. Let’s look at each major estate planning element that you need to update.

• Your Will – Though some states’ laws automatically address the issue of wills and beneficiaries after divorce, that is not always the case. Assuming that you no longer intend your ex-spouse to benefit after your death, you will need to update its terms and designate new beneficiaries. Make sure you also check whether you had previously named your ex as executor or trustee, as well as any revisions you might want to make about the guardianship of young children.
• Trusts – Trusts are complex documents that need to be specifically addressed, especially if you have a living trust. If your trust documents name your ex-spouse as a trustee, beneficiary, or in any way involved in decision-making, adjustments should be made as soon as possible. Other issues such as the management of assets for children or other beneficiaries may also need to be revisited, especially if you no longer want your ex-spouse to manage these assets in case of your death.
• Beneficiary Designations – Beyond wills and trusts, you may have named your ex as beneficiary on life insurance policies, retirement accounts, bank accounts that are payable on death, and other documents. Because the terms of these types of documents generally override the instructions in a will or trust, they will need to be individually updated so that they reflect your current intentions.
• Managing Children’s Needs – If you are a parent, it may be a good idea to set up trusts or guardianship provisions that ensure their financial needs will be met in case of your death.
• Other Documents – Other documents that may need to be updated include durable powers of attorney and health care proxies.

Ending a marriage is a complex process that involves far more than leaving a person. For guidance and support from experienced, detail-oriented professionals, contact our office today.