People create estate plans to protect themselves and their family members. When their circumstances change significantly, their estate planning documents may require major revisions. Divorce is one of many personal scenarios in which extensive estate planning revisions may be necessary.
Recently-divorced individuals may need to review and update their estate plans. Doing so allows them to protect themselves, their dependents and the legacy they want to leave when they die.
Divorced individuals who already have estate planning documents may need to ask themselves a few important questions to better ensure that their estate plans properly address their needs given their new family circumstances.
Is my spouse still a beneficiary?
Many people name their spouses as their primary beneficiaries. Other times, spouses may share the estate with the children of the testator. While families can potentially contest an outdated estate plan that includes a former spouse as a beneficiary, actively removing them from the will or trust documents is usually a more effective solution. Additionally, testators may need to review their life insurance beneficiary designations. Many people forget to update their insurance providers even if they make changes to their wills. Their spouses may then receive their life insurance proceeds after they pass.
Did I appoint my spouse to a position of authority?
There are many critical roles that people assign to others with their estate planning documents. People choose a personal representative to administer their estates. That person has access to all of their resources and may even receive compensation for the functions they perform during the state administration. If the estate plan includes a trust, a spouse might be a trustee or co-trustee. People with powers of attorney or advance medical directives may also need to ensure that their spouse doesn’t hold authority in the event of an emergency.
Replacing a spouse as a healthcare proxy or financial power of attorney is usually a smart decision. Those who do not yet have advance medical directives and powers of attorney may want to establish them for better protection because they do not have a spouse to handle their affairs in an emergency scenario.
Is my children’s inheritance at risk?
Removing a spouse as a beneficiary does not necessarily prevent them from accessing the resources included in an estate. If the primary beneficiaries of an estate are minor children, then the surviving parent or guardian taking care of those children may control their inheritance until they become adults. Recently divorced parents may need to consider funding a trust as a way to preserve an inheritance for their children.
Asking the right questions and making timely estate planning adjustments can help people fully sever their legal and financial ties to a spouse after a divorce. Estate planning updates are a critical step for those concerned about their care, their legacy or their children.