Do I Need to Update My Estate Plan After Divorce?
Yes, updating your estate plan is an essential part of getting divorced. Most people create their first estate plan after getting married or having children, and your wishes as a newlywed or new parent will likely be different than your wishes as a divorcee.
If you do not update your estate plan, your ex-spouse could stand to inherit your assets or make important medical decisions on your behalf. To clarify your new wishes, you will need to update:
Your Last Will and Testament
The best way to revise your will in a divorce is to revoke your old will and create a new one. When you draft a new will, be sure to specify that the new document will revoke any prior wills, and if you have any prior wills in your possession, shred or burn them.
Although most states remove your ex from your will automatically once the divorce decree is finalized, you may need to clarify who stands to inherit your property instead. Your attorney may advise you to update your will during divorce because, without a divorce decree, your soon-to-be-ex could stand to inherit everything you own.
In your will, you may also name an executor or decide who will oversee your estate after your death. If you named your ex-spouse as your executor, you may wish to name a new executor in your new will. Remember that most states automatically remove your ex-spouse from your will, so if you fail to name a new executor, the court will rely on any alternate executor you named.
Your Healthcare Proxy
If you cannot make healthcare decisions for yourself, your healthcare proxy will make them for you. For this reason, your healthcare proxy needs to be someone you trust absolutely. After a divorce, you may not want your ex making these kinds of decisions on your behalf. When planning your estate after divorce, do not forget to change your healthcare proxy (also called your healthcare power of attorney).
Your Power(s) of Attorney
In addition to changing your healthcare power of attorney, you may want to change your financial power of attorney. Otherwise, your ex could control your assets if you become incapacitated.
Your Beneficiary Designations
You may have named your spouse as the beneficiary on many financial accounts, including life insurance policies, real estate holdings, and car titles. After your divorce, you may want to remove your ex from these accounts and replace them with a new beneficiary.
Keep in mind that you must honor any prenuptial agreement (prenup) you signed, and courts generally divide retirement accounts between spouses during divorce. Do not update IRAs, 401(k)s, or pension(s) without permission from the court.
If you do not have a trust for your minor children, now is the time to set one up. Without a trust, your ex-spouse will have control of your children’s finances until they turn 18. Similarly, if you previously had a trust to support your family in the event of your incapacity or death, you may want to remove your ex as a trustee.
Keep in mind that the rules for revocable and irrevocable trusts are different. If you have questions, contact an attorney.
Your Plans for Minor Children
Creating a trust for your children is important, but so is planning for their care if you die. Most of the time, your ex will gain full custody of any children you have together, but if you have other wishes, you should document them in your estate plan. For example, you could express concerns about an ex’s drinking problem and request that your minor children stay with your adult sibling instead. This kind of “note” can be especially important if your divorce was due to substance abuse, domestic violence, or another issue that could put your children in danger.
Additionally, you should consider what would happen to your children if something happened to you and your ex (stranger things have happened). Name an alternative caretaker that you trust in case your spouse is unavailable to care for the children you share after you pass.
What If My Wishes Haven’t Changed?
You still need to update your estate plan. Even if you want your ex to remain in your will, trusts, and other important documents, you will need to draft new documents after divorce. As we mentioned earlier in this blog, many states assume your wishes have changed after divorce and remove your ex from your will automatically.
By drafting a new will after divorce, you can specify that your wishes have not changed – and that you still want your ex to inherit (or control) your estate. You can also change some documents while reaffirming others. For example, you may want your ex to stay in your will and choose someone else to serve as your healthcare proxy.
At the very least, you should review your existing estate plan and determine which wishes you need to clarify after your divorce.
When Should I Start Working on My Estate Plan?
As soon as you know you are getting divorced, you can start working on your estate plan. However, there are some parts of your plan you cannot touch until after your divorce is finalized.
You can, for instance, update your will at any time, but you cannot change your beneficiaries on certain accounts until the family law court has a chance to review them.
At Nichols Dixon, we can help you with your divorce and your estate plan at the same time – and that’s just one way our firm stands out. If you are looking for a lawyer with experience, reputation, and results, look no further than our outstanding legal team.
Call us at (405) 294-1511 or contact us online to discuss your case today.