Estate Planning Needs to Happen After a Divorce

When your marriage ends, you need to immediately take action to make certain your interests are protected and that your estate plan reflects your new marital status.

What should you change? Forbes says, in two words, almost everything.

In “5 Things You Need To Do After Getting A Divorce,” Forbes says that once your divorce is final—with your divorce decree approved and the judgment rendered by the family court judge—you should immediately review and revise, if necessary, the following legal and estate planning documents:

1. Trusts
2. Powers of Attorney (property, healthcare, HIPAA, etc.)
3. Will (if you have one)
4. Life insurance policies
5. Retirement accounts

For example, if your ex-spouse remains the beneficiary of your life insurance policy and you pass away, the proceeds will go to your ex-spouse instead of your children. That might not be what you want now.

If you don’t have a valid will in place, since after a divorce an ex-spouse is no longer legally considered to be an heir, he or she will not be in line to receive anything from your estate. With your retirement accounts, after a divorce, you may revise your will to say that your 401(k) goes to your children, but if your wife remains the beneficiary of the plan, then she will get those funds. The retirement plan designations take priority over your will. The same is true for life insurance: proceeds will go to the named beneficiaries of those policies, rather than those named in a will.

Remember that when you make changes to estate planning documents, be sure those changes are in sync with the terms of your divorce decree. If the divorce decree states that your ex-spouse is to remain the beneficiary of a life insurance policy, you don’t want to change that beneficiary designation on the policy.

Reference: Forbes (February 26, 2016) “5 Things You Need To Do After Getting A Divorce”

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