Updating Your Estate Plan After a Divorce
6 Steps for Revising Your Estate Plan During or After DivorceHere are six valuable tips that will help you with updating your estate plan after a divorce.
Revoking the Old will and Making a New OneWhile you are getting divorced or after the finalization of your divorce, your first step must be to revoke your old will and replace it with a new one. If you do not have a will yet, this is the perfect time to remedy that oversight. To accomplish that, you can seek the assistance of an attorney with significant experience in estate planning law. You can even do so online or use a will-making software; however, this is something that can be a hit and miss. In the event that you complete the form incorrectly, or botch the execution ceremony of the will, you may have an inappropriate document, or a document that will be impossible for the court to admit to probate. Here is what your will allows you to do.
- You can leave your property and assets to your loved ones. It is absolutely your choice on who gets what, and sometimes you can even attach some conditions or create some trusts. The people you nominate to receive your assets upon your death are known as beneficiaries or heirs.
- You also must name an executor, a person who will ensure that the distribution of your assets goes as per the instructions in the will. Your executor can be ANYONE – and while it is frequently your spouse, a relative, a friend, or an attorney – really it can be anyone you trust. In case you do not have a will, the court will appoint an administrator (similar to an executor) on its own discretion to carry out the distribution of your estate and finances.
- If you have young children, you must take care to nominate a guardian to take care of them.
Naming New BeneficiariesAlways remember that if you made your ex-spouse or ex-in-laws a beneficiary in your will, then you must revoke, revise or change your estate plan immediately when divorce papers are filed. While a final divorce decree often invalidates a bequest to an ex-spouse (in most states), this begs the question: what happens if you die before the divorce is finalized and the divorce decree entered? This may come as a shock to you, but if you die during the divorce process before the divorce is finalized by the judge’s signing the divorce decree, and without creating a new will, your spouse may still be a beneficiary while you now do not intend to share anything with them. Moreover, the rest of your will may remain the same; although again in some states, a final decree of divorce removes ex-spouse’s relatives from the will. Rather than wait on the long, drawn-out court process, why not revise your estate plan immediately? Many people who have been through a divorce would tell you that the process can drag on, and on, and on, and …. you get the picture. We hope you agree that this qualifies the matter of revising your estate plan as urgent!
Name Your Executor WiselyHave you named your former spouse or a former in-law as the executor of the will? In that case, you most likely would not want them to be the executor of your will or in charge of your estate upon your demise. Therefore, you can remove them as an executor immediately by changing your will. Once again, some states’ laws automatically revoke your ex-spouse’s status as an executor of your will or serve as a trustee of your property or trust. In this case, if you have nominated an alternate/backup executor in your will, it is going to serve the purpose. But why take the chance, and why wait? Make your revisions to your estate plan early on in the divorce process and buy yourself some peace of mind! A quick piece of advice here, though. When choosing an executor of your will, it is wise to ensure it is not someone controversial. If an executor is someone the other beneficiaries do not like, it may cause more dissent and litigation.
Nominating the Guardians of Young ChildrenIf you have minor children, then you must always nominate a guardian who would take care of them if you should die before they reach age 18. This will be the person you will be the legal custodian of your children. The job of the guardians will be to raise your children as per your wishes (if any). In case both you and your ex-spouse die without nominating a guardian, then the court will appoint a guardian for your underage children. Let us suppose you do not wish your ex-spouse to raise your kids just because you want nothing to do with them. In that case, unfortunately, you may not get your way and the courts would likely deem your former partner as a guardian, absent some sort of glaring problems. Nonetheless, it is important to update your declaration of guardian.
Update Each Beneficiary DesignationAssets held in an account bearing a beneficiary designation pass by contract upon the death of the holder – they are what we call “non-probate assets” meaning that they do not pass through the probate process and are not controlled by the provisions of the will. So, during a divorce or after a divorce, the accounts and assets of your estate will be divided. In this case, you may want to redistribute your estate and assets and re-designate various beneficiaries to effect your desired distribution of assets. Therefore, you must update your beneficiaries’ designations on various documents. These include:
- Your life insurance policy
- Retirement accounts, including 401 (k) and IAs
- Your pay-on-death bank account nomination
- Your transfer-on-death bank account
- Submit a written request to nominate new beneficiaries or heirs
- Request your banks, employers, and other entities such as insurance companies to send you the confirmation of the new documents as soon as possible.