Getting divorced is a complicated process even for couples without any minor children. This is because it requires dividing up a partnership, so each individual can go his or her own way. While there are many details to iron out in terms of dividing assets, one thing that often gets overlooked is how your estate plan will be affected. These tips will help you get your plans in order, so your final wishes will be carried out later.
Change Your Medical Power of Attorney
Whether your estate plan refers to this as a medical power of attorney or a healthcare proxy, this is the person designated to make decisions regarding your medical care. There may come a time when an illness or injury will render you incapable of voicing your medical care decisions. In that case, you will want someone you trust in charge of making these decisions for you. Unless you make the change, your ex-spouse will retain this right and they may not be acting in your best interests.
Change Your Financial Power of Attorney
Similar to the healthcare proxy, this is someone designated to take charge, if you become incapacitated. The difference is this person has authority over your financial decisions.
This means they have the authority to:
- Pay your bills
- Access your bank accounts
- Access investment accounts
- Collect and cash paychecks
- Make financial decisions in your name
The goal is to ensure your assets are protected and your financial obligations are met, while you’re unable to act on your own behalf. Most people appoint a spouse to handle this, but, if you get divorced and fail to change this designation, your spouse will still be your financial power of attorney. As a result, he or she will retain access to your finances. That may not be in your best interests.
Make a List of Things to Change After Your Divorce
A divorce action puts a freeze on certain assets and accounts, which remains in effect until the divorce is finalized. This means you won’t be able to change the beneficiary on life insurance policies, pensions, and other types of accounts. The exact documents or accounts affected will vary from state to state, so consult your estate planning lawyer to find out exactly what will be affected. Once you know what accounts are frozen in this manner, you should make a list to ensure you won’t forget to change them after the divorce is finalized.
Change Your Will
In some states, you may not be allowed to create a new will, but your lawyer should still be able to help you make the necessary changes. There are a number of things to consider changing after your divorce. For instance, you’ll want to designate new heirs, or possibly leave more of your assets to your children. If you do have minor children and you have sole custody, you may want to designate another individual as their guardian. If you named your spouse as the executor of your will, this may be another detail to consider changing.
Change Your Trust
Many people have a revocable trust, or a living trust, in addition to a will. One of the advantages of a revocable trust is that it doesn’t go through probate, allowing your heirs to receive larger inheritances sooner. If you have a revocable trust, talk to your lawyer about changing it after your divorce. You may not want to leave your assets to an ex-spouse, particularly if you become involved with a new partner down the road.
This could complicate things for your loved ones after your passing. In some states, you may still have to leave something to an ex-spouse, but your lawyer can ensure you only leave them the minimum required by law. There’s no need to leave an ex-spouse more than necessary, when you could leave those assets to your children and other loved ones.
Estate planning is a complex matter in itself. If you fail to make these changes at the time of your divorce, your assets may not go to the right beneficiaries, or your ex-spouse may end up with rights you didn’t intend. While your estate plan should be periodically reviewed and updated, it’s especially important to make changes after your divorce. Amending your estate plan after the divorce is finalized will help ensure your estate plan is in accordance with your wishes.