Divorce can be a very painful and overwhelming process. After a divorce, people often overlook updates to their estate planning. Post-divorce an individual and their loved ones should consider reviewing the following documents.
Don’t have a will yet? You are not alone, national statistics indicate that more than 50 percent of Americans die without leaving a will. Do not be that 50 percent. The absence of a will creates many problems for your loved ones and can involve lengthy court battles between your relatives. The consequences of leaving no will can be especially significant after a divorce or breakup. People often forget to create a will to ensure that the assets and decisions are taken out of the hands of the former spouse.
Trust & Wills
These documents contain all the instructions that are vital to estate planning. For example, key questions to consider: who is in charge of administration of the individual’s estate? Who is chosen as guardian of minor children? Who are the beneficiaries of the estate? Who is in charge of managing assets on behalf of the beneficiaries if they are minors? Most often, a newly divorced individual would not want their ex-spouse to be in charge of their assets should they pass away or become incapacitated. Joint trusts need to be dissolved after a divorce, with each individual creating their own with the appropriate updated instructions and properly titled assets.
Durable Power of Attorney for Finances/Advance Healthcare Directive
These estate planning documents allow for the appointment of an agent to act on one’s behalf to make very important financial and medical decisions incase of incapacity. Check to ensure that you ex-spouse is not listed as the person who has power of attorney or the person who can make healthcare decisions on your behalf.
Beneficiary Designations are contracts between a financial institution and the person who owns the account. Even if a trust/will document has been updated post-divorce, those instructions will not control as asset with a beneficiary designation attached to it unless the trust is named as a beneficiary.
Titling of all Major Assets
Title is very important in estate planning because it dictates to whom and how an asset is transferred at death and who has control over it during lifetime. Proper and formal titling of all major assets are imperative to ensure that the assets go to whom the individual wants in the way that the individual wants.
Steps To Take Following Divorce:
1. Change your beneficiary designations under your own life insurance and do not rely on language in a divorce decree to make sure that your wishes are followed. If the ex-spouse is required to obtain life insurance to pay to you or your children, see proof of the insurance in writing with beneficiary designation.
2. Contact your employer’s human resources department and change the beneficiary on your
pension, stock options, life insurance, and other employee benefits.
*If you are not yet divorced, your spouse may have to sign a written waiver permitting you to change beneficiaries.
Keep your personal papers at a location where an ex-spouse or a child’s parent can’t steal or destroy them.
3. If you have minor children, designate someone under a will to serve as a guardian to the children if your ex-spouse is unavailable. A new will specifically informs a surrogate and probate judge of your wishes and if there is no will, a judge can only guess. Setting up a trust in the will so children and grandchildren receive funds when you want them to receive their money. This will preserve money for their college and necessary expenses.
4. When selecting a trustee for funds, select a person you actually trust. Even if your divorce is amicable and you wish to have your ex-spouse be trustee for your children, you should still have new estate planning documents drafted and executed after the divorce to confirm your wishes.
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