The Estate Planning Updates Your MUST Make
In the first part of this series, we discussed a few of the most critical updates you must make to your estate plan if you’re getting divorced. Here, we’ll cover the last three of these must-do planning tasks for your estate planning and divorce.
Because getting divorced can be overwhelming on so many different levels, updating your estate plan often takes a back seat to other seemingly more-pressing priorities. But failing to update your plan for divorce can have potentially tragic consequences, some of which you may have never even considered before.
In fact, it’s critical that you update your plan not only after the divorce is final, but as soon as you know the split is inevitable. Until your divorce is final, your marriage is legally in full effect, so if you die or become incapacitated while the divorce is still ongoing and you haven’t updated your plan, your soon-to-be ex spouse could end up with complete control over your life and assets.
For example, if you suddenly die of a heart attack while the divorce is ongoing and never got around to changing your estate plan, it’s quite likely that your future ex would inherit everything. And if that’s not bad enough, if you were to become incapacitated in a car accident during the divorce, the very person you’re paying big money to legally remove from your life could be granted complete authority over all of your legal, financial, and healthcare decisions.
This is something your divorce attorney won’t think to bring up, but it’s literally one of the most critical matters you need to handle if you’re ending your marriage.
3. CREATE A NEW WILL
You should create a new will as soon as you decide to get divorced, because once you file, you may not be able to change your will. Rethink how you want your assets divided upon your death. This most likely means naming new beneficiaries for any assets that you’d previously left to your future ex and his or her family and removing your ex’s relatives from guardianship or executor’s roles. And unless it’s your wish, you’ll probably no longer want your ex—or any of his or her family—listed as your will’s executor or administrator, either.
Some states have community-property statutes that entitle your surviving spouse to a certain percentage of the marital estate upon your death, regardless of what’s in your will. This means if you die before the divorce is final, you probably won’t be able to entirely disinherit your surviving spouse through the new will.
However, it’s almost certain you wouldn’t want him or her to get everything. Given this, you should update your 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.
And should you choose not to create a new will during the divorce process, don’t assume that your old will is automatically revoked once the divorce is final. State laws vary widely in regard to how divorce affects a will. In some states, your will is revoked by default upon divorce. While in others, unless it’s officially revoked, your entire will—including all provisions benefiting your ex—remains valid even after the divorce is final.
4. AMEND YOUR EXISTING TRUST OR CREATE A NEW ONE
If you have a revocable trust set up, you’ll want to review and update it, too. Like wills, the laws governing it, when, and how you can alter a trust during a divorce can vary, so you should do it as soon as legally possible. In addition to reconsidering what assets your ex-spouse should receive through the trust, you’ll probably want to replace him or her as a successor trustee if they are so designated.
And, if you don’t have a 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’re 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, for example, 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 and supervise their spending, 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. So you should at least discuss creating a trust with an estate planning attorney before ruling out the option entirely.
5. REVISIT YOUR PLAN ONCE YOUR DIVORCE IS FINAL
During the divorce process, your main planning concern is limiting your soon-to-be ex’s control over your life and assets should you die or become incapacitated before divorce is final. Given this, the individuals to whom you grant power of attorney, name as trustee, designate to receive your 401k, or add to your estate plan in any other way while the divorce is ongoing are often just temporary.
Once the divorce is final and your marital property has been divided up, you should revisit all of your estate planning documents and update them accordingly based on your new asset profile and living situation. From there, your plan should continuously evolve along with your life circumstances, particularly following major life events, such as getting remarried, having additional children, and/or when close family members pass away.
DON’T WAIT, ACT NOW!
Even though divorce can be one of life’s most difficult transitions, it’s vital that you make updates to your estate planning during this trying time. Putting off updating your plan, even for a few days, during a divorce can make it legally impossible to change certain parts of your plan, so take action now. And, if you’ve yet to create an estate plan at all, an impending divorce is the perfect time to finally take care of this crucial task.
Disclaimer: This article is intended to serve as a general summary of the issues outlined therein. While this article may include general guidance, it is not intended as, nor is a substitute for, qualified legal advice. Your review or receipt of this article by Lexern Law Offices, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG. The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.