Estate Planning Following a Divorce
For many people, the main goal of estate planning is to establish someone else who can manage their health needs if they become incapacitated and allow one to control the distribution of their assets after they pass away. However, after the end of a marriage, many of the focuses of your estate plan will need to change. Thus, once your divorce is finalized, it is critical that you scrutinize and update your estate plan accordingly.
Estate Planning Issues to Consider after Divorce
A divorce can be one of the toughest experiences someone can go through during their life. However, considering, updating, or creating the following estate planning documents should be a priority after separating from your ex-spouse.
- Health care proxy: If your ex-spouse is your current health care proxy, you should immediately revoke this power and give this position to another family member or close friend.
- Power of attorney: Similar to the health care proxy, if your former spouse is your power of attorney, you should quickly give this role to someone else.
- Revise wills and trusts: To protect your assets, you should have your attorney rewrite these documents so that your ex-spouse will not receive any of your wealth.
- Guardianship for minor children: If you had children with your previous spouse, they will be the default guardian for your children. That is unless you can prove to the court that your ex-spouse has substance abuse issues or shows other behavior that could put the children at risk.
- Create a trust for children: A trust lets you control your assets while alive and can even allow you to decide exactly what your children spend their money on after you pass away.
- Life insurance: When paying child support or alimony, it is usually required to take out a life insurance policy. Make sure you properly name your ex-spouse and if applicable, your children, and keep up with paying premiums.
- Review beneficiaries: Make sure to update the beneficiaries on retirement plans such as 401(k)s and IRAs to comply with divorce agreements.
- Don’t forget about the prenuptial agreement: A prenuptial agreement for a new marriage will not protect you entirely. However, this document can lessen the amount of estate planning changes you will need to make if you go through another divorce.
Once your divorce is final, it is important to update your estate plan to avoid potential legal issues, protect your assets, and put someone else in place to make important health care decisions for you.