Divorce, Part 1 of 7: Revamping an Estate Plan
This blog post is the first of a seven-part series regarding the estate planning implications of divorce for individuals who are going through a divorce or have completed the process. This post serves as a road map for future posts.
Divorce is an earth-shattering experience. It is one of the most difficult legal experiences you’ll ever go through, and there are lots of things to think about. While your main concerns might be child custody or alimony, an extensive review of your estate plan should not get lost in the shuffle. Divorce wreaks havoc on your estate plan, and failure to update it could result in your ex-spouse receiving substantial assets or even controlling your health care.
There are many ways that divorce can significantly impact your estate plan:
- Provisions in your Will regarding your ex-spouse are likely invalidated. If you have a trust, it might be useless after the divorce. If you have no plan at all, it is now more important than ever to put an estate plan in place.
- Divorce probably does not invalidate your ex-spouse’s power under a Power of Attorney or a Health Care Power of Attorney.
- Beneficiary designations operate independently of your Will and could send assets to your ex-spouse even if your Will does not.
- If your Will doesn’t contain a testamentary trust for your minor children, the court would administer your assets through a process that is often inefficient and inflexible. Your children would receive a lump sum when they turn eighteen, when they may not be prepared for the responsibility of dealing with the money.
- Your ex-spouse might be first in line to take full custody of your children if anything were to happen to you, but maybe not. You should name guardians to care for your children.
Tip: Your estate planning attorney should work together with your divorce attorney to ensure that your revised estate plan complies with any requirements placed on it by the divorce judge. It is common for a court to require you to name your ex-spouse or your children as beneficiaries of life insurance that would replace child support payments if you were to die. Attempts to get around these requirements would almost certainly fail and end up costing your estate a bunch of legal fees.
Review your estate plan with an estate planning attorney if you decide to get a divorce.
- Take immediate action to remove power from your ex-spouse.
- As the divorce progresses, you will probably want to revise or replace your entire estate plan.
