Divorce may seem like a simple solution.
Many marriages crumble.
In addition to your dearest relationship, your financial security can disintegrate before your eyes.
According to a recent Forbes article titled “9 Things You Need To Know About Estate Planning After Divorce,” if you divorced last year, you need to update your estate plan.
Yes, you are probably tired of working with an attorney.
Divorce proceedings and mediation are no fun.
The last thing you want to do is work with an estate planning attorney.
It will be worse if you do not.
Your divorce decree may have stipulations regarding your responsibilities when you die.
Your attorney will be able to navigate these to create a new plan to fit your circumstances.
What are other things you need to consider?
Advance Health Care Directive.
If you had one before you will likely need to update it.
An advance health care directive appoints someone of your own selection to have authority over your health care decisions should you be unable to communicate them yourselves.
It is highly likely that you appointed your former spouse as this someone.
Chances are you do not want to leave your life in the hands of your now ex-spouse.
By the way, in our practice the advance health care directive consists of the health care treatment directive, durable power of attorney for health care decisions, and even an anatomical gift declaration.
Durable Power of Attorney (Financial).
The kissing cousin to the advance health care directive is the general durable power of attorney for financial decisions.
So, should you become incapacitated, who will continue operating your financial life from paying bills to filing tax returns to making investment decisions and more?
Unless you execute a new DPOA, that someone will continue to be your former spouse.
Your Will and Trust.
To avoid unnecessary confusion, execute a new last will and testament.
Not only could unnecessary confusion reign at your passing, why leave behind any unintended consequences regarding the fiduciaries you appoint and the inheritance you leave.
Do you have minor children?
If yes, chances are your ex will be named as the guardian if you die.
Did you divorce your spouse because of his or her personal issues, maybe even physical or emotional abuse?
There is a possibility a judge would see your ex as an unfit guardian.
You can select another individual to rear your children should this be the case.
If yes, you should leave enough money in a joint bank account with your appointed guardian so she has funds to fight for custody in the courts and prove your ex is unfit to rear your children.
A trust for your minor children.
Do you want to leave an inheritance for your minor children that is protected from your ex?
You should set up a trust.
This allows you to have someone besides your ex control and manage the inheritance for your children.
Oftentimes you must maintain life insurance as part of a divorce decree.
Work with your attorney to see what your responsibilities are.
Make sure you follow the requirements of the divorce decree to the letter.
Your 401K and IRA beneficiary designations must be consistent with your divorce decree.
Update your beneficiary designations accordingly.
Note: when it comes to ERISA retirement plans (think 401K), whoever is named as the beneficiary upon your passing will inherit that retirement plan.
That includes your ex, even if "disinherited" under state law!
See the United States Supreme Court decision of Egelhoff v. Egelhoff for more on this.
Are you planning to get remarried?
Be sure to ink a prenuptial agreement to protect your assets, as well as your children from your previous marriage.
Although you may be sick of attorneys, now is the best time to update your estate plan.
Reference: Forbes (January 8, 2019) “9 Things You Need To Know About Estate Planning After Divorce”