Going through a divorce is a difficult transition that involves a number of considerations, not the least of which is how to divide the marital property. During this trying time, it is important to control your emotions and maintain your objectivity. Once the divorce is settled, it is also crucial to revisit your estate plan. By consulting an experienced estate planning attorney, you can chart a course for your new lifestyle.
Estate Planning 101
Unfortunately, it is far too common for people to prepare a will and leave it in a file cabinet or a dresser drawer and not think about it; however, planning an estate is not a once and done affair. Quite the contrary. It is a good idea to review your estate plan on a regular basis to make sure it is up to date. The general rule of thumb is to revisit an estate plan about every 2-3 years so that it is congruous with major life changes — marriage, buying a home, starting a family, as well as divorce.
It is important to note that some estate planning documents cannot be altered until after the divorce is finalized. In any case, your primary concern while the divorce case proceeds should be protecting your assets and the inheritance rights of any children from the marriage. As difficult as a marital breakup can be, it is crucial to reorganize your affairs so that you will be better prepared for your future.
The first consideration is revising your durable power of attorney and healthcare proxy by naming new agents to manage your personal affairs and coordinate your healthcare in the event of incapacity. Although the appointment of a spouse as a healthcare agent is revoked as a matter of law after a divorce, it is wise to create a new healthcare proxy much earlier.
After the divorce is finalized, your will and any trusts that you have established should also be revised. In particular, if your spouse was named as your executor, he or she should be replaced by another trustworthy party (e.g. a sibling, parent, or close friend). Moreover, your beneficiary designations in these estate planning documents should also be updated. In so doing, you can make sure that your assets will be protected and that your children will receive their rightful inheritance.
It is worth noting that the divorce agreement may even require you to establish a testamentary trust in your will to protect the inheritance rights of minor children. Finally, don’t forget to update the beneficiary designations on retirement plans and other accounts; also remember that assets in a retirement plan (e.g 401(k), IRA) are considered marital property that are subject to division in a divorce.
The Takeaway
Although going through the divorce process can be overwhelming, you need to think clearly and act quickly to protect your interests. By working with the right estate planning attorney, you will have peace of mind knowing that your assets, your family, and your future will be protected.