The Journal Enterprise explains in its recent article, “5 Estate Planning Moves If You Are Getting Divorced,” that the following tips will help you get your plans in order, so your final wishes will be carried out later.
Medical Power of Attorney. This is also called a healthcare proxy. The agent you choose makes decisions on your medical care if you’re ill or injured and can’t state your wishes. If you named your spouse as your health care agent, it is important to update this document after the divorce.
Financial Power of Attorney. Like a healthcare proxy, this is someone you select to take charge if you become incapacitated. This person has authority over your financial decisions. For example, the financial power of attorney has the authority to pay your bills, access your bank and investment accounts, collect and cash your paychecks and make financial decisions for you. You want to be certain that your assets are protected, and your financial obligations are met while you’re unable to act on your own behalf. Most people name a spouse as financial agent so it is once again important to update this document after the divorce.
Create a List of Things to Change After Your Divorce. A divorce can freeze some assets and accounts, which remains in effect until it’s finalized. Therefore, you may not be able to change the ownership of your bank and investment accounts or the beneficiary on life insurance policies, pensions and other types of accounts until after the divorce. You should make a list of all of your assets and accounts to ensure you won’t neglect to change them when the divorce is finalized.
Modify Your Will. You should update your will after your divorce as you likely provided an inheritance for your ex-spouse. If you have minor children and you have sole custody, you may want to designate another person as their guardian or consider adding a trust for their benefit. If you named your spouse as personal representative of your will (person in charge of handling the estate), you should update that as well.
Modify Your Trust. You may have a revocable living trust in addition to a will. One of the advantages of a revocable trust is that it doesn’t go through probate, so your heirs get a bigger inheritance more quickly. If you have a revocable trust, you will have likely included provisions for your ex-spouse thereunder, as a beneficiary and/or trustee, so this should also be updated.
Many state laws do revoke the right of an ex-spouse to receive an inheritance or act as a fiduciary under estate planning documents even if the ex-spouse is still named in the documents. However, state laws vary so it is important to update your documents as soon as possible after your divorce. If you don’t 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.
Reference: Journal Enterprise (March 20, 2019) “5 Estate Planning Moves If You Are Getting Divorced”