ESTATE PLANNING AFTER DIVORCE
This article discusses estate planning after a divorce, why you need to re-think your estate plan once the divorce is finalized and some of the pitfalls if you don’t take action.
In many states, including where I practice law, once you are divorced, your estate plan treats your former spouse as if they have predeceased you. This means they wouldn’t inherit anything in your will or trust, even if you have listed them as a beneficiary but never changed the documents after the divorce was finalized.
Regardless, you should update your estate plan to remove the ex-spouse, assuming those are your wishes, once you are divorced. Why? First, your state law may not be the same. Second, because you may still have them listed as beneficiaries on accounts, agents under your power of attorney and otherwise in control of your assets if you become incapacitated. Third, even if that’s the case, you might have an ex-spouse trying to inherit based on your outdated will or trust documents. As I always tell clients, once you are in court, you’ve already lost.
The best practice, therefore, is to update your estate plan and replace your ex-spouse with new executors, new trustees and new agents under your power of attorney documents.
You should also do a review of your beneficiary designations for assets like life insurance, bank accounts and vehicles. If your ex-spouse is not removed as a beneficiary, they can still inherit life insurance and account proceeds, even if you are divorced. Those designations are not decided by your will or trust and are contractual. Try imagining a worse outcome than your former spouse receiving the proceeds of your large life insurance policy.
It’s important to note that you can also update your choices for guardians of minor children, but, no matter how much you may dislike the other parent of your children, their biological rights trump those of anyone else you may name. You should still name a guardian or guardians in case the other parent predeceases you or you seek to remove their parental rights. If that occurs and you pass away, your choice of guardians would be considered by the court, especially if your children are younger. As the saying goes, it’s much better to be safe than sorry.
There are a myriad of reasons why you should make changing your estate plan a priority if you have divorced. An experienced St. Charles living trust and estate lawyer can work with you to ensure that your estate plan reflects your updated wishes with respect to your estate.
Thanks to our friends and contributors from Legacy Law Center for their insight into estate planning after divorce.