In addition to the issues you face in going through a divorce, what many divorce attorneys fail to tell you is that the divorce may impact your estate plan in multiple ways. Although the law does automatically remove an ex-spouse as a beneficiary of your will, a trust is not similarly affected, nor are many types of beneficiary designations. Therefore, to ensure that your estate will pass the way you want it at your passing following your divorce, it is important to revisit your estate plan.
1. Beneficiary designations
It is most important to review all beneficiary designations previously made on all financial accounts, retirement plans and life insurance policies. Many people designate their spouse as the primary beneficiary, which is likely no longer your wish post-divorce. Failing to update beneficiary designations could result in your ex receiving assets you did not intend for that person to receive.
2. Asset distribution
Divorce involves the division of marital assets. This will impact your estate plan’s provisions for the distribution of assets following your death. It is important to review your will or trust to ensure that it reflects your revised asset ownership and distribution preferences post-divorce. This may involve updating provisions related to property ownership, bequests, and inheritance rights.
3. Powers of attorney & Health care directives
Many people have also named their spouses as agent under their durable and medical powers of attorney. These documents empower your designated agent to make legal, financial, and medical decisions on your behalf if you become incapacitated. While going through a divorce, you may want to reconsider who you appoint as your agents on these important documents.
Taking proactive steps to update your estate plan during, or at least following, your divorce will provide peace of mind in ensuring that you have documentd your current desires regarding who will care for you during incapacity, administer your estate after death, and receive the assets you worked so hard to accumulate.