Estate Planning After a Divorce

This article originally appeared at: https://www.sarahsshepard.com/blog/ep-after-divorce

No matter how you slice it, divorce is hard. There’s just no way around the changes and challenges it brings. Even if two spouses split amicably, so many things will be different, seemingly.

One of the most significant challenges you’ll have to face after a divorce — preferably head-on — is changing your current estate plan. If you’ve worked with a Huntsville attorney before, you should already know that estate planning is ongoing. Therefore, you need to ensure that your last will and other directives reflect your current circumstances as much as possible.

The sooner you get around to updating your estate plan after a divorce, the better off you’ll be. This article will tell you everything you need to know about revisiting your estate plan post-divorce.

Read on to learn more.

How Divorce Can Affect Your Estate Planning Divorce isn’t just something that disrupts your present-day way of life. It also impacts your future plans, especially if those plans are to remarry or take on other ventures.

If you put an estate plan in place, or at least a will while you were married, you probably choose to leave most of your assets to your spouse. You probably even named your spouse your power of attorney (POA) and medical proxy if anything happened to you.

What’s more, you’ve never thoroughly planned your estate. As a result, there’s still a good chance that your ex-spouse is still the beneficiary of your life insurance policy, retirement accounts, or any payable on death (TOD) bank account.

Let’s be honest, after a divorce, you don’t want your ex-spouse handling your affairs or making your medical decisions — especially if they stand to gain the majority of your estate. You also don’t want them inheriting your life insurance or retirement funds or anything else that should go to your children, a new spouse, or even close relatives. However, if you don’t revise your estate planning documents and disinherit your ex-spouse , that will happen.

Revising Your Estate Plan After a Divorce If you’re going through or have just finalized an emotional rollercoaster of a divorce, revising and updating your estate plan is probably the furthest thing from your mind. However, your Huntsville attorney will strongly recommend that you get it done as soon as possible to protect any minor children, your assets, and your peace of mind.

When it comes to estate planning in Huntsville, AL, after a divorce, the following are the most important things you’ll need to do for your revision:

Revoke Your Existing Will If you didn’t already have a last will drawn up with your previous spouse, now is a great time to start fresh. Wills are arguably the most important document in your files to protect your future assets during probate court and from the Alabama Intestate Succession laws.

However, suppose you have already created an estate plan with your former spouse. In that case, you’ll need to update it immediately — starting with its revocation.

Revoking your will simply means changing it, although destroying it or creating a new one works just as well in most states. Again, your Huntsville attorney will walk you through the process. Still, the most critical elements involve removing your ex’s name from the document entirely and reviewing your chosen guardian for any minor children. (We’ll talk more about this in just a moment).

Update Your Healthcare Proxy Just like your will, you probably chose your ex-wife or husband to stand in as your healthcare proxy. This means they would have the authority to make any health-care-related decisions on your behalf should you become mentally incapacitated and unable to do so yourself — which requires a great deal of trust.

Of course, if you had an amicable divorce and can trust your ex-spouse to make these decisions for you, then it’s perfectly fine to leave your healthcare proxy as is.

Change Your Powers of Attorney Much like a healthcare proxy, your power of attorney is someone who you’ve chosen to manage specific affairs if you cannot do so yourself. You can have a different power of attorney for other circumstances, such as medical, financial, or business-related affairs.

The most important thing to keep in mind here is that your powers of attorney need to be people you can absolutely trust. For example, suppose you’ve named your former partner your power of attorney for any circumstance and don’t feel you can trust them. In that case, you’ll want to change these directives immediately.

Review Your Beneficiaries As you already know, your named beneficiaries are the people who will inherit your assets or money from your will or any trusts you’ve created. However, they’ll also benefit from the accounts:

Retirement accounts, such as IRAs and your 401(k)

Life insurance policies

Payable on death accounts (also referred to as TODs)

You’ll want to carefully review all of these documents and your named beneficiaries to ensure that the right people will inherit the good assets. This is especially important if this isn’t your first divorce and there are other non-biological children involved, as you may want to disinherit them and your ex-spouse.

When it comes to beneficiaries, you’ll want to understand what was agreed upon in terms of the divorce to ensure that your estate doesn’t end up in a long, drawn-out litigation process if certain parties have a dispute after you’ve passed.

Consider Creating Trusts Suppose you don’t already have any trusts set up. In that case, you’ll definitely want to consider them after a divorce, especially for alimony payments or child support. Trusts are especially beneficial when you want to ensure that your child or children will be financially protected should they end up in your ex’s care after you’ve passed. Again, you can name someone other than your ex-spouse as a trustee.

Another beneficial attribute of a trust is that the assets you put into them go directly to the named beneficiary. Unlike a will, a trust cannot be contested as the asset becomes the legal property of the beneficiary.

What’s more, a trust doesn’t just protect your beneficiaries to ensure they inherit certain assets. They also protect your assets while reducing your overall estate tax.

There are several different types of trusts you can choose from, including a living trust and a testamentary trust, both of which can be revocable or irrevocable .

Re-evaluate Your Chosen Guardian for Any Minor Children Suppose you’re going through a nasty divorce. Your former spouse struggles with substance use issues or a severe mental health disorder. In that case, your guardianship documents are one of the most critical components of your new estate plan.

Keep in mind that you must have valid concerns about how suitable your ex-spouse would be as your children’s sole caretaker and provider. You would need to put any grievances in writing so that your concerns will be reviewed and addressed if the time ever comes.

You’ll also want to reevaluate any guardians you’ve named in your will to care for your children if something were to happen to you and your former partner. Divorce can change even the best familial relationships, which means the chosen person may not be someone you want in your children’s life down the road.

Review Your Prenuptial and Postnuptial Agreements Suppose you’ve had a prenuptial or postnuptial agreement with your former spouse. In that case, you’ll need to review these documents carefully to see precisely what they are entitled to. Anything listed in these documents cannot be changed, which means they cannot be included in your new estate plan.

Speaking of prenuptial agreements, a prenup is a great way to protect your assets and estate if you plan to remarry. It’ll also make revising your estate plan more straightforward if needed.

Become Familiar with Your Life Insurance Policy Life insurance policies have specific rules regarding how they’re paid out, to whom, and what they guarantee. So there’s a good chance you won’t need to do anything with your policy other than removing your ex-spouse’s name. However, it’s essential to have a firm and clear understanding of what your policy states and who is responsible for what.

The Importance of Seeking Professional Estate Planning Guidance Post-Divorce You probably have no idea what you’re doing when it comes to both estate planning and filing the paperwork. Sure, there are online templates available, but those templates aren’t universal regarding the rules and regulations per state.

When you work with a Huntsville attorney on revising your estate plan after a divorce, you’re guaranteed the following:

A clear understanding of the state’s laws. It’s your Huntsville attorney’s job to know Alabama’s state laws inside and out regarding estate planning. This means that they can ensure all your documents are drawn up and revised appropriately, allowing you to create a solid new estate plan following the law.

You’ll save money. Working with an attorney is never cheap. However, forgoing one can cost you if you make a mistake. It will also cost your family a pretty penny in legal fees for probate court — fees they may not be prepared for. Your Huntsville attorney can help minimize those fees while also managing your and your family’s expectations.

An objective party that can manage disputes. An estate planning attorney can easily organize complicated business affairs and navigate tricky family circumstances because their field experience has allowed them to become well-versed in these disputes. They will assist in disputes, but they’ll also minimize any obstacles that make creating a new estate plan difficult.

They can be named the executor of your will or trustee of any trusts. Suppose you need to appoint a new executor or trustee for your will and trusts but don’t have anyone you can depend on. In that case, your Huntsville attorney is the perfect person for the job. They are familiar with your affairs, but they’re legally bound to handle things appropriately.

Divorce or no divorce, estate planning is an ongoing process. A lot can change in ten years, just as a lot can change in two years. So, you’re always going to want to ensure that your estate plan reflects your current circumstances and last wishes. Sarah S. Shepard can help you with that.

Reach out to us today to schedule a meeting with Sarah S. Shepard or another experienced estate planning Huntsville attorney to help you revise and manage your estate

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