A Divorce Necessitates a Review of Your Estate Plan
Despite the best intentions, divorce can, and does, happen. It’s sometimes unavoidable, and while the emotional and financial fallout can take a lot of energy, it may also be worth looking at how these life changes impact your estate planning. Even the best laid plans need to change according to circumstance, and divorce is definitely one of those circumstances. You may have plans with your spouse involving trusts, guardianships of children, and insurance policies in place. You’re probably named as the beneficiaries on each other’s retirement plans. A divorce impacts all of these. Here’s what to be aware of if you are going through this situation.
First, it is important to be familiar with the existing documents, and have some understanding of how a divorce can impact them. Documents to be familiar with include your living will, health care proxy, insurance policies, power of attorney, and any trusts you may have established with your ex-spouse. The majority of these will need to be updated and replaced, to reflect the changes in your situation. After all, you and your ex-spouse may now have different ideas on what should happen to the assets when one of you passes away.
It is also important to know what your life insurance policy says. Make sure you know what it guarantees, and how it’s paid for. The owner of the policy is responsible for making payments on the premium. The owner can also make determinations on beneficiaries and how the benefits are paid. You’ll want to make sure your loved ones are in a position to be cared for should you or your ex-spouse pass away prematurely. Life insurance can help to guarantee the continued payment of things like alimony and child support. Instituting a trust as owner of the insurance policy may be a good way to ensure there are no gaps during the divorce.
Setting up a living trust might be a good idea, as it can direct payments to alimony and child support. Of course, you’ll be required to fund the trust, which ensures the payments are made according to your provisions. An additional benefit of this is that the funds will be directed to your heirs at the time of your death, and will not be tied up in probate. There are also tax advantages to setting up a trust like this, should you be going through a divorce. An attorney will be able to discuss these choices with you.
Adding an estate planner to the team working on your divorce may be a good idea, for the expertise they can bring to the process. An estate planner can look for gaps that may arise in your divorce settlement, and prevent anything unwanted from happening. This is an important step to take, as they can help protect you from state and federal taxes, as well as working toward seeing that you and your beneficiaries will be provided for in the event of your ex-spouse’s death. They can also point out what impact the divorce will have on your retirement fund, and ensure your wishes are carried out at the time of your death. Divorce attorneys have a different set of priorities when working on your case and may not have these issues at the forefront of their minds.
Contact an Estate Planning Lawyer After Your Divorce
An experienced estate planning attorney will know how to navigate the process of adjusting your estate to the divorce, and provide advice moving forward. When it comes down to it, your estate, and the people it benefits after your death are vitally important. Protecting your assets, and making sure your family will be provided for are important considerations, and an attorney experienced in these matters will work toward advising you on how to meet those goals.