Estate Planning After a Divorce: Why It's Important
Even under the most amicable circumstances, divorce can be a difficult process that often creates emotional and financial strife for those involved. The experience forces people to manage multiple, life-altering transitions all at once, alone, while also confronting the sad demise of a very significant relationship.
If you’re going through the divorce process, it can be especially challenging to consider updating your estate plan after a divorce, but it is also in your best interest to prioritize this task and not delay it. If something unforeseen happens to you before this is taken care of, your assets can be distributed in a manner that doesn’t align with your wishes. Your ex-spouse could be the beneficiary of a portion or the entirety of your estate. Our New Jersey estate planning attorneys can help to guide you when you’re ready to put together an estate plan after a divorce.
Estate Planning After Divorce – What You Should Consider
Before your divorce, reviewing any pre-nuptial or postnuptial agreement, you may have in place to see what you or your spouse are entitled to is wise. Armed with this information, you can confidently move forward with a good idea of what to expect financially as you proceed.
Next, be sure to check these boxes when it comes to your estate plan after a divorce:
- Change beneficiary designations. "Can a divorced spouse inherit?" This is a question we hear quite often. Even an updated will may not address some of your most valuable assets. You can request new documents from your bank, employer, or financial advisor to amend these beneficiary designations. It is important to submit these updated documents as soon as possible. Although a divorce automatically revokes an ex-spouse as a beneficiary, you always want to make sure that the beneficiaries of these accounts are up-to-date and accurate. Many assets pass outside a will to beneficiaries named on documents provided by an insurance company or financial institution. It is critical to update beneficiary designations for:
- Retirement accounts, such as an IRA or 401(k)
- Pay-on-death bank accounts
- Transfer-on-death accounts
- Update your health care proxy as part of your estate planning after a divorce. Powers of attorney are documents that authorize someone to act on your behalf if you become incapacitated in some way and cannot make decisions for yourself. One power of attorney is for healthcare and medical decisions. The second is a financial power of attorney. If you already have powers of attorney that name your former spouse as the individual authorized to make these decisions on your behalf, they must be revoked. New documents must be drafted that name another trusted individual of your choosing to take on this role.
- Update your will and trust. Your will is where you bequeath your property to loved ones, name an executor to manage your estate, and nominate a guardian to take care of minor children if necessary. With the guidance of your estate planning attorney, you can remove provisions that name your ex-spouse as the executor and trustee of your will. This ensures that your ex-spouse will not be in control of your estate or become the beneficiary of any assets held in it. This is key when it comes to your estate plan after a divorce.
- Review guardianship. Guardianship documents are an important part of an estate plan. It is often the primary reason parents of minor children create a will, to begin with – to name a guardian to care fora child who is under the age of 18 if neither parent is able. If you have valid concerns about your ex-spouse being a fit guardian, for example, if your ex-spouse struggles with addiction, you can voice your grievances in writing and include them in your estate plan documents. While it is most likely something you may not be able to prevent, you can attach a statement to your will voicing this concern for a judge to review.
- Create a trust if you don’t have one already. Creating a trust as part of your estate planning after a divorce is a wise move. A trust can distribute alimony and child support, and it can also direct funds to your heirs. Trusts can be advantageous if you don’t want your ex-spouse to be your child’s guardian if you become incapacitated or die unexpectedly. A revocable trust can name someone you choose to act as a trustee. This person will control the money and assets in your estate on your children’s behalf. Keep in mind that there are several trust mistakes that can be made so you should always work with an experienced estate planning attorney.
- Once finalized, provide your estate planning attorney with a copy of your divorce agreement. As part of your estate planning after a divorce, your attorney needs to be aware of any obligations you may have to your ex-spouse in the event of your death, which will be stipulated in this document. Your attorney will advise you of any necessary changes that need to be made upon review of the agreement.
Update Your Estate Plan After a Divorce With the Guidance of a Trusted Estate Planning Professional
The divorce process can sometimes be complicated, stressful, and emotionally charged. Enlisting the guidance of a trusted estate planning attorney at BMC Estate Planning will ensure that your best interests are always served, even when you are not in the best headspace to make decisions. Your trusted partner at BMC will make sure that you are armed with the knowledge needed to plan for your future and protect your loved ones. Consult with BMC Estate Planning and get through the divorce process with less difficulty and much more confidence.
Getting in touch
Borenstein, McConnell & Calpin, P.C. is a Wills & Estate Planning law firm serving Central and Northern New Jersey, as well as New York City. We strive not only to give you a great client experience, but to become your trusted adviser for life. To reach Alec, please send an email to email@example.com.
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