Divorce marks a significant turning point in life. Post-divorce, individuals often feel compelled to reassess their financial and emotional landscapes. One crucial area that demands immediate attention is the estate plan.
After a divorce, revisiting your estate plan is not merely advisable. It is essential. Taking proactive steps helps ensure your estate plan accurately reflects your current wishes and intentions. Neglecting to update your plan can lead to unintended consequences.
This article broadly covers considerations and steps for modifying your estate plan after a marriage dissolution.
Assessing Your Current Estate Plan
Begin by reviewing your existing estate plan documents. Look closely at your wills, trusts, and powers of attorney. Identify all beneficiaries listed in these documents, especially those directly connected to your former spouse.
This process helps you understand who receives what after your death. Do not overlook appointed representatives. You may have your ex-spouse as your appointed executor or healthcare proxy. These relationships no longer reflect your current situation, and you must change the plan accordingly.
Other considerations for your estate plan post-divorce include:
- Updating Trusts
If you established any trusts during your marriage, revisit these documents to assess whether your ex-spouse remains a trustee or a beneficiary. It may be necessary to dissolve the trust or modify its terms to reflect your new situation. - Adjusting Financial Accounts
Ensure that your bank and investment accounts properly reflect changes in ownership and beneficiaries. Doing so can help prevent disputes or misallocation of assets. - Amending Life Insurance Policies
Check the beneficiary designations on any life insurance policies. If your former partner is listed as a beneficiary, you may need to update this designation to ensure that your funds go to the intended recipients.
Steps to Update Your Estate Plan
Revoking or Amending Your Will
To revoke a will, you can either create a new will that explicitly states you revoke the previous one, or you can physically destroy the old document.
When creating a new will, ensure it reflects your current desires regarding beneficiaries and asset distribution. Clearly outline your intentions to prevent any legal disputes. Consider including a statement that addresses your divorce explicitly. This step reduces ambiguity about your wishes.
Work closely with your attorney to make sure your prior will is invalidated, and your current one meets appropriate legal standards.
Changing Beneficiaries on Financial Accounts
Next, turn your attention to changing beneficiaries on financial accounts. Life insurance policies and retirement accounts often list your spouse by default. After a divorce, this designation may no longer align with your wishes, and it may be necessary to overtly change the account’s terms.
Reach out to your financial institutions to obtain the necessary forms for updating beneficiaries. When choosing new beneficiaries, consider who is currently important to you after the divorce. Remember to include children, siblings, or friends, ensuring accounts reflect your current intentions. Promptly make these updates to avoid complications later.
Revising Trusts
Your divorce can also affect any trusts you maintain. Trusts require formal amendments to ensure they align with your new circumstances.
Consult the trust document to determine how divorce impacts your trust provisions. You may need to change trustees, beneficiaries, or even the terms of the trust itself. Do not wait to make these adjustments. Failure to do so can lead to confusion or undesired distributions, countering your intentions.
The Role of an Attorney
Engaging an attorney proves invaluable after a divorce. An experienced legal professional can provide tailored advice based on the law and your circumstances. They can guide you through the complexities of estate planning post-divorce, helping you make informed decisions.
When working with a lawyer, prepare a list of questions to discuss with your attorney. Inquire about the necessary steps to update your estate planning documents accurately. Also, ask about potential tax implications. Understanding these factors will help you restructure your estate plan smoothly.
If you are concerned about your finances after a divorce, Cynthia Tracy, Attorney at Law, P.C. can help. We can assess your current plan and help guide your next steps. You can schedule time with our team by calling us at (281) 612-5443 or contacting us online.
