Once the process of legally ending your marriage begins, you will need to make sure that your own interests are protected; that includes updating your estate plan to reflect this big life change. While some things may remain the same (such as leaving your children certain assets), be assured that pretty much everything else will change, according to Forbes’ article, “The First Thing You Must Do When Your Divorce Is Final.”
Once your divorce is final (the divorce decree has been approved by a judge and a judgment rendered), contact your estate planning attorney and begin to review and possibly revise the following legal and estate planning documents:
- Powers of Attorney (financial, healthcare, HIPAA release, etc.)
- Your will
- Life insurance policies
- Retirement accounts
If your ex-spouse is the beneficiary of your life insurance policy and you die—guess what? The proceeds go straight to your ex-spouse and not your children. It doesn’t matter if your estate planning documents stipulate that the proceeds should go to your children. Unless the plan all along was to keep the ex as beneficiary, you’re fine. Otherwise, the kids get zero.
At Family Estate Planning Law Group, we encourage our clients to focus on asset ownership, as the title (or name) on accounts is what usually determines what happens to that asset after your death. Life insurance policies and most retirement accounts are contracts, which means the beneficiary designation form you complete contractually obligates the insurance company or retirement account custodian to distribute assets according to the designation, as mentioned above.
We help clients with the initial alignment of assets with their estate plans, work with them to receive verification from institutions of the correct alignment, then track the changes over time. If you move jobs and start a new 401(k), we want to know and help you include it in and align it with your plan. If you sell your home, that triggers a change in your estate plan, as well. Have a new child with a new spouse? You’ll want to review and probably update your estate plan to care for that child, as well.
Many people, however, overlook this aspect of post-divorce planning: when you make changes to estate planning documents, the changes must be in accordance with the terms of your divorce decree. The divorce judgment is legally binding, and if, as a part of your divorce, you agreed that your ex-spouse would remain the beneficiary of a life insurance policy, you can’t go and change the beneficiary designation on that policy.
If these documents are not in agreement, the divorce judgment overrides any decisions you made in your estate plan. Your estate planning attorney will need to review your divorce decree while preparing new documents for your new life.
If you are finalizing a divorce, you’ll want to work with an experienced estate planning attorney to ensure your plan is consistent with your divorce decree, that all assets are appropriately titled and in line with your estate plan, and that your plan will care for any children or a new spouse.
For more information on the importance of aligning, verifying and tracking assets, explore our website and contact us to schedule your consultation today!
Reference: Forbes (August 14, 2016) “The First Thing You Must Do When Your Divorce Is Final”