The Importance of Updating Your Will When Divorce is Imminent
Divorce can be traumatic for the whole family. Even if the process is amicable, it involves many tough decisions, legal hassles, and painful emotions that can drag out over several months, or even years.
That said, while you probably don’t want to add any more items to your to-do list during this trying time, it’s absolutely critical that you review and update your will and estate plan — not only after the divorce is final, but as soon as possible once you know the split is inevitable.
Even after you file for divorce, your marriage is legally in full effect until your divorce is finalized. That means that if you die while the divorce is still ongoing and you haven’t updated your estate plan, your soon-to-be-ex spouse could end up inheriting everything. Maybe even worse, in the event you’re incapacitated before the divorce is final, your ex would be in complete control of your legal, financial, and healthcare decisions.
Given the fact you’re ending the relationship, you probably wouldn’t want him or her having that much control over your life and assets. If that’s the case, you must take action, and chances are, your divorce attorney is not thinking about these matters on your behalf.
While some state laws limit your ability to completely change your Will once your divorce has been filed, you should consider making permissible changes as soon as possible when divorce is on the horizon – at minimum, making changes to your power of attorneys and beneficiaries.
HOW TO UPDATE YOUR WILL POST-DIVORCE
1. UPDATE YOUR POWER OF ATTORNEY DOCUMENTS FOR HEALTHCARE, FINANCIAL, AND LEGAL DECISIONS
If you are incapacitated by illness or injury during the divorce, who would you want to make life-and-death healthcare decisions on your behalf? If you’re in the midst of a divorce, chances are you’ll want someone other than your soon-to-be ex making these important decisions for you. If that’s the case, you must take action. Contact us now; don’t wait.
Similarly, who would you want to manage your finances and making legal decisions for you? In light of the impending split, you’ll most likely want to select another individual, particularly if things are anything less than friendly between the two of you. Again, you have to take action if you do not want your spouse making these decisions for you. Don’t wait, contact us if you know divorce is coming.
2. UPDATE YOUR BENEFICIARY DESIGNATIONS
Failing to update beneficiary designations for assets that do not pass through a will or trust, such as life insurance policies and retirement accounts, is one of the most frequent—and tragic—planning mistakes made by those who get divorced. If you get remarried following your divorce, for example, but haven’t changed your IRA beneficiary designation to name your new spouse, the ex you divorced 10 years ago could end up with your retirement savings upon your death.
That said, in most states, once either spouse files divorce papers with the court, neither party can legally amend their beneficiaries without the other’s permission until the divorce is final. Given this, if you’re anticipating a divorce, you may want to consider changing your beneficiaries prior to filing divorce papers. If your divorce is already filed, you should consult with us to see if changing beneficiaries is legal in your state—and in your best interest.
Finally, if naming new beneficiaries is not an option for you now, once the divorce is finalized it should be your number-one asset protection planning priority. In fact, put it on your to-do list right now!
Next week, we’ll continue with part two in this series on the critical estate-planning updates you should make when divorce is inevitable.
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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.