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5 Estate Planning Must-Dos if You’re Getting Divorced -Part 1
Going through a divorce is a serious and traumatic event that affects the entire family. Even if there is no animosity behind it, it involves may tough decisions, hassles, and painful emotions that can drag on for months to years.
It’s also absolutely critical that you review and update your estate plan as soon as you know a divorce is inevitable, even before the divorce is final.
Simply separating or even just filing for divorce does not mean you and your soon to be ex-partner are no longer legally married. If you become incapacitated or die during the divorce process and you haven’t updated your estate plan, your soon to be ex may end up inheriting everything originally planned for. Or if you become incapacitated before the divorce is finalized, your ex could also be in complete control of all your legal, financial, and healthcare decisions.
Assuming since you’re ending the relationship, you wouldn’t really want your soon to be ex-partner to have this much control over your life and assets. If this is the case, you must take action into your own hands and make sure these changes are made as your divorce attorney will likely not be thinking about these matters.
While some state laws limit your ability to completely change your estate plan once your divorce has been filed, the following are a few of the most important updates you should consider making as soon as possible when divorce is on the horizon.
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 making life-and-death healthcare decisions on your behalf? If you’re in the middle of a divorce, you’ll probably want someone other than your soon to be ex to make these serious decisions for you. Contact us now; don’t wait.
Similarly, who would you want managing your finances and making legal decisions for you? Considering the impending divorce, you might want to choose another person for your financial needs as well. 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
One of the most important changes to consider, is updating your beneficiary designations on any assets where beneficiaries are named and do not pass through a will or trust. Some examples of these types of assets include, life insurance, retirement accounts, etc. Failing to update beneficiary designations is one of the most frequent—and tragic—planning mistakes we see happen. For example, say you get remarried after your divorce, but haven’t changed your IRA beneficiary designation to name your new spouse as the beneficiary, the ex you divorced 15 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 a possibility 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 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.
This article is a service of The Solution Law Firm, P.A. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Planning Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Planning Session and mention this article to find out how to get this $750 session at no charge.