From the division of assets and property to child custody and parenting time, there are numerous issues that must be contemplated, negotiated and decided upon during the divorce process. While state law mandates that important financial and custody issues like these be settled prior to a final judgment of divorce being entered, those related to estate planning may go unaddressed.
If you’ve taken the time to draft a will or designate a power of attorney, you understand the importance of having these documents. However, like many people, you may fail to revisit and make amendments to key estate planning documents when circumstances change. Unfortunately, in the wake of a divorce, the financial and personal consequences of failing to update an estate plan can be significant and adversely affect you and your loved ones for many years to come.
Divorce: 4 Estate Planning Documents To Update
- A Will – The beneficiaries and contents of a will should be changed after a divorce to remove an ex-spouse and omit or add directives related to property that was lost or won in a settlement. If you don’t update your will, many of its directives may be unenforceable.
- Advance Directive For Healthcare – Failing to update an advance directive for healthcare means that, in the event that you become incapacitated, an ex-spouse will be privy to your personal health care information and able to make related decisions on your behalf.
- Power Of Attorney – If you become incapacitated and are unable to manage your finances and make important decisions, a power of attorney will step in to assume those responsibilities. If an ex-spouse is still listed as your power of attorney, there may be serious financial and other consequences.
- Beneficiary Designations – Trusts, retirement accounts and life insurance policies all require that you name a beneficiary and, upon your death, assets held in these accounts pass directly to a beneficiary. If you previously designated an ex-spouse as a beneficiary and fail to change your designation, even though you are legally divorced, your ex will receive the related assets.
Given the numerous and significant matters that must be sorted out both during and after a divorce, it’s no wonder that updating estate planning documents often falls to the bottom or completely off of a to-do list. However, as referenced in the list above, failing to address estate planning changes in the wake of a divorce can have significant implications for you, your children and a new spouse.
If you are going through a divorce, it’s important to speak with your attorney about your current estate plan. An attorney can assess your situation and provide information and guidance about how to protect your interests.