The end of a marriage through a divorce brings about significant changes in various aspects of one’s life, including financial matters and legal rights. Among the important considerations that arise during this process is the need to update your estate plan.
An estate plan consists of legal documents that outline your wishes regarding the distribution of assets, guardianship of children and health care decisions in the event of your incapacity or death.
Review beneficiary designations
One crucial task is reviewing and updating beneficiary designations on various accounts and policies. Many financial assets, such as retirement accounts, life insurance policies and investment accounts, require naming beneficiaries. Failure to update these designations after a divorce can result in unintended consequences, as your estate plan may still include your former spouse as a beneficiary. By revisiting and updating these designations, you can ensure that your assets distribute according to your current wishes and avoid potential conflicts or disputes.
Revisit your will and trust
Take the time to revisit your will and trust documents. A will outlines how your assets should distribute upon your death, including the appointment of guardians for minor children. Following a divorce, it is essential to review and modify your will to remove your former spouse as a beneficiary or executor and make any necessary changes to asset distribution. Similarly, if you have established a trust, it is crucial to update the trust provisions to reflect your changed circumstances and intentions.
Consider health care and power of attorney documents
Estate planning also involves addressing health care decisions and powers of attorney. During a divorce, it is common to reevaluate who should have the authority to make health care decisions on your behalf or manage your financial affairs in case of incapacity. Select individuals you trust to carry out these important responsibilities.
Protecting your children’s interests
For individuals with minor children, you may need to revise guardianship provisions, naming alternative guardians who align with your current wishes and who you believe would provide the best care for your children. Failing to update these provisions could result in unintended consequences, as your former spouse may be automatically considered the guardian in the event of your death or incapacity.
Updating your estate plan helps ensure that your wishes are accurately reflected and your assets distribute as intended. Although the end of a marriage can be a challenging time, taking the necessary steps to update your estate plan provides peace of mind.