A long and drawn-out divorce can leave you feeling drained: emotionally, physically, and sometimes financially. However, if there is one legal issue you cannot afford to forget once your divorce is finalized, it’s updating your estate plan. Your estate plan could dictate crucial moments in your life yet to come, as well as what happens to your belongings long after you are gone.
Three of the most common reasons that people engage in estate planning is to avoid probate (59%), minimize arguments among future beneficiaries (57%), and to ensure that children will not mismanage their inheritances (39%). However, it is also important to review your estate plan after a divorce, as the role of your ex-spouse has now significantly changed. Here are the essential steps to take with your family lawyer.
- Revoke and Rewrite Your Will.
After a divorce, you need to clearly dictate who will inherit your property in the event of your death, who will serve as your executor to fulfill the terms of your wishes, and who will become the guardian of your children, if necessary. These changes likely mean removing your former spouse from your will, either in part or in full.
- Reassign Beneficiary Designations.
If you have a life insurance policy, a retirement account or 401k, or any transfer-on-death brokerage or bank accounts, make sure that you have assigned a proper beneficiary for each of these arrangements after your divorce. This may require additional forms from your bank, employer, or policy provider, as well as your lawyer.
- Make a New Power of Attorney.
Who will make decisions on your behalf if you are unable to do so? Most people have two separate powers of attorney for healthcare issues and for financial issues. If your spouse was previously your power of attorney, you need to again revoke those documents and write up new terms with your lawyer.
Divorce is never easy, but it is important to make sure that you wrap up any and all loose ends so that you can successfully enter into the next phase of your life. Make sure that your estate plan reflects your wishes in the here and now so that you and your family can be fully prepared for the future.