Going through a divorce can be an overwhelming experience that impacts nearly every facet of your life, including estate planning. Yet with so much to deal with during the divorce process, many people forget to update their plan or put it off until it is too late.
Last week in part one we discussed the first two changes you should make to your plan: updating your beneficiary designations and power of attorney documents. Here in part two, we will cover the final updates to consider.
3. Create a new will Creating a new will is not something that can wait until after your divorce. In fact, you should create a new will as soon as you decide to get divorced. Once divorce papers are filed you may not be able to change your existing will. Since most married couples name each other as their executor and the beneficiary of their estate, it is important to name a new person to fill these roles as well. When creating a new will, rethink how you want your assets divided upon your death. This most likely means naming new beneficiaries for any assets that you previously left to your future ex and his or her family. Keep in mind that some states have community property laws that entitle your surviving spouse to a certain percentage of the marital estate upon your death, no matter what your will dictates. If you happen to die before the divorce is final, you probably will not be able to entirely disinherit your surviving spouse through the new will.
It is almost certain that you would not want him or her to get everything. Given this fact, you should create your new will as soon as possible once the divorce is inevitable to ensure the proper individuals inherit the remaining percentage of your estate should you pass away while your divorce is still ongoing.
Should you choose not to create a new will during the divorce process, do not assume that your old will is automatically revoked once the divorce is final. State laws vary widely regarding how divorce affects a will. In some states, your will is revoked by default upon divorce. In others, unless the will is officially revoked, your entire will —including all provisions benefiting your ex— remains valid even after the divorce is final.
With such diverse laws across state borders, it is vital to consult with us as soon as you know divorce is coming. We can help you understand our state’s laws and how to best navigate them when creating your new will—whether you do so before or after your divorce is complete.
4. Amend your existing trust or create a new one
If you have a revocable living trust set up, you will want to review and update it. Like wills, the laws governing if, when, and how you can alter a trust during a divorce can vary. Therefore, you should consult us as soon as possible if you are considering divorce. In addition to reconsidering what assets your soon-to-be ex-spouse should receive through the trust, you will likely want to replace him or her as successor trustee, if they are so designated.
If you do not have trust in place, you should seriously consider creating one, especially if you have minor children. Trusts provide a wide range of powers and benefits unavailable through a will, and they are particularly well-suited for blended families. Given the likelihood that both you and your spouse will eventually get remarried—and perhaps have more children—trusts are an invaluable way to protect and manage the assets you want your children to inherit.
By using a trust, should you die or become incapacitated while your kids are minors, you can name someone of your choosing to serve as successor trustee to manage their money until they reach adulthood, making it impossible for your ex to meddle with their inheritance.
Beyond this key benefit, trusts afford you several other levels of enhanced protection and control not possible with a will. For this reason, you should at least discuss creating trust with an experienced lawyer like us before ruling out the option entirely.
During the divorce process, your primary planning goal is limiting your soon-to-be ex’s control over your life and assets should you die or become incapacitated before the divorce is final. In light of this, the individuals to whom you grant power of attorney, name as trustee, designate to receive your 401k, or add to your plan in any other way while the divorce is ongoing are often just temporary.
Once your divorce is final and your marital property has been divided up, you should revisit all of your planning documents and update them based on your new asset profile and living situation. From there, your plan should continuously evolve as your life changes, especially following major life events, such as getting remarried, having additional children, and when close family members pass away.
Get started now Going through a divorce is never easy, but it is vital that you take the time to update your estate plan during this trying time. Meet with us, as your Life & Legacy Attorney, to review your plan immediately upon realizing that divorce is unavoidable, and then schedule a follow-up visit once your divorce is finalized.
Putting off updating your plan, even for a few days, as you are in the process of a divorce can make it legally impossible to change certain parts of your plan, so act now. And if you have yet to create any estate plan at all, an upcoming divorce is the perfect time to finally take care of this vital responsibility. Contact us today to learn more.
This article is a service of Reflections Life Planning LLC. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you have ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.