Divorce triggers a need to update your estate plan

On Behalf of | Jan 27, 2020 | Divorce & Legal Separation, Estate Planning |

Going through a divorce comes with many changes. While you might be focused on matters like where you’re going to live and how to share the children, you also need to take the time to update your estate plan. There are several components that will likely change now that your marriage is over.

Even though you get some aspects of your estate plan changed now, you’ll still have to review others after the divorce is finished.

Review power of attorney designations

The power of attorney for health care and the one for finances might need to be changed because of the divorce. Many people name their spouse, so unless you want your ex to make decisions on your behalf, you will have to find a new person to name.

You don’t have to name the same person for both of these duties. Instead, you can pick a person who is financially savvy to handle the money and asset matters. The person you name to make your medical decisions should be able to do what you’d want without considering their own feelings.

This is also a good time to check your advance health care directive. It should reflect your current wishes in a manner that conveys them clearly to your medical team.

Plan for your children

Even though most people wouldn’t think about leaving assets to an ex, you might consider finding a way that your assets could provide support for the children. Using trusts might help in this case, but you’ll have to wait to do this until after the divorce.

Your new estate plan will need to provide a strategy for what will happen to the children if you pass away. If their other parent is still living, they will probably have custody. It is a good idea to also include guardianship designations in case something happens to you and the other parent at or around the same time.

Once the divorce is finalized

Updating your estate plan might not be possible during the divorce process because you won’t know the exact property division settlement. Additionally, the court issues a restraining order that prohibits the change of beneficiary designations until the divorce is finalized. This means that you may have to wait to write out a new will and establish trusts until after the legal matter is resolved. You’ll have to decide on an executor for your estate plan at this time since you likely won’t want your ex handling it.

This is also the time for you to update the beneficiary information. Check for the payable on death information on your financial accounts. You can also review life insurance policies and retirement accounts. This ensures these will go to the person you intend when you pass away.