The divorce has been finalized, your belongings have been split up, and for the first time in months you feel like you might finally be getting used to this new life you’ve begun. Separation and divorce are emotional situations. When you are focused on the important issues of alimony, equitable distribution, child custody, and child support, the fact that you may or may not have an updated and effective estate plan is likely the furthest thing from your mind. In fact, most clients would be surprised to learn a separation does not immediately end an existing estate plan.
Depending on how your estate documents are drafted, your ex-spouse or soon-to-be ex-spouse may have more powers than you think via your durable power of attorney, healthcare agent, executor, trustee, or beneficiary designations. Depending on the nature of your circumstances, the outcome of applying an outdated estate plan to your current situation at best could be less than ideal; however, at worst, it could be a disaster. So, before you kick your feet up for some much-needed self-care, there is one last thing you must do before turning the page to the next chapter – review your estate plan and make any of the necessary updates.
Power of Attorney
If you and your spouse executed a power of attorney during your marriage, you may want to consider having those powers revoked.
Update Your Will
Now is a great time to update your will – especially if your Will leaves your ex-spouse in control of your estate or receiving a notable share of the estate’s value.
Guardianship of Children
For parents of minor children, often, the most important part of the estate plan is who you will select to care for them in the event of your death. Parents should put significant thought into the selection of a guardian for their minor children – and this may be even more important after divorce.
Update Beneficiary Designations
Does your pension identify your spouse as your beneficiary? Most of the time, we think of beneficiaries as the person who will receive your estate after death but, after a separation, consider designations for life insurance policies, retirement accounts such as IRA’s and 401k’s, and transfer-on-death brokerage accounts.
Ensure your Estate Plan is consistent with other legal documents
The terms of any prenuptial, postnuptial, and separation agreements or Orders that were signed or entered into as a result of the relationship and divorce should be consistent with your estate plan. More importantly, ensure all of these documents are consistent with your desires moving forward with your next chapter in life.
For divorced couples, updating their individual estate plans is the final frontier before embarking on a new journey. If you are going through it now, just remember that you are almost there.