Nov 23, 2021
The Importance of Updating Your Estate After Your Divorce
The divorce itself is stressful, costly, and time-consuming. For some couples it takes every last bit of energy out of them. There is so much to think about when going through a divorce. One very important thing to consider when divorcing is updating your estate plan. Most people do not have a will, and they do not want to discuss it because they feel they are young and healthy and “it is not time yet”. Then there are those people that do have wills and probably forget to update that when going through the divorce. The following are some things you must do before you get divorced so you can protect the assets you worked to protect during the divorce process.
Christina Lombardo-Zaun, Esq., an Attorney-Mediator at Alpha center for Divorce Mediation, talks about updating your estate during and after divorce.
Most states have laws that have provisions where if you pass and you did not update your will, the law will presume that your ex-spouse died before you and will not inherit your estate. However, you need to check your state’s laws to verify this.
A will documents how you will leave your property; both real and personal to the people you choose. It also outlines who will be in charge of administering your estate. If you have minor children, it can identify who will be the personal guardian of the child(ren). You need to name a new executor (male) or executrix (female). This should be someone you trust.
You will also need to update or draft your Power of Attorney. This is a very important document that grants power to a person to handle your financial matters when and if you become incapacitated. Normally, when married, if a spouse becomes incapacitated, the other spouse simply takes over and handles the billing and other financial issues. You most likely do not want this person handling your finances once divorced.
In some states you can also draft a Health Care Power of Attorney where it acts similarly to the financial Power of Attorney, but it relates to matters of health and welfare. Again, you might not want your ex-spouse making those large decisions for you. This is also a good document to have as it puts your wishes in writing. Keep in mind that you go into the hospital during the divorce and you do not have a will or a power of attorney, the doctors go to next of kin, which is usually a spouse. While you are handling this part of the process, make sure to update your HIPAA release information and your emergency contacts. This is an easily overlooked area, but yet, it is very important area!
In addition to the will and power of attorney documents, you will need to change your beneficiaries on all of your financial instruments. This includes life insurance policies, retirement accounts like 401ks, or IRAs. There are also bank accounts that are payable on death. Some people forget that they set up these designations so it is important to go through and update each one. I suggest doing this every five years as a good practice. Keep in mind you could have your ex-spouse on your life insurance as a beneficiary if the children are under the age of 18. Some of my couples in mediation do this for each other.
Please note that a property settlement agreement does include provisions where one spouse gives up the rights to the other’s estate, however, if one spouse dies before the divorce is finalized, those provisions may not be effective and/or enforceable in a court of law. Each state has specific rules and it also depends on the stage of the divorce (if grounds for divorce were established). This alone, is a good reason to hire an expert to guide you through this process.