If you’re reading this, it means you’re the type of person who likes to plan. You’re on top of your business – you’ve already written an estate plan, and you want to make sure that it stays accurate to your wishes and the needs of your dependents. However, sometimes even the best laid plans go awry; you’ve gotten divorced.
Not only is divorce often messy socially and emotionally – no divorce ends a happy marriage, but it’s still traumatic – it’s also messy legally and financially. It’s important that you rewrite your estate plan to reflect the new relationship you have with your ex-spouse, any minor children you may have, as well as any financial obligations you have to your spouse in the future (such as alimony or child support).
Depending on your situation, the process of rewriting your estate plan may be fairly straightforward, or extremely complicated. Before we go any further, we’d like to recommend that you hire a legal advisor to help you with this – especially if you and your ex-spouse bought property together, had children, or if they were financially dependent on you.
Here’s how to get started rewriting your estate plan:
Tally What’s Yours
Since you’ve just finished the legal proceedings of divorce, the first step in rewriting your estate plan will be comparing the property and assets listed in your current plan to how your joint property was divided. These changes will vary based on your personal case – you may only have ownership changes on property such as a shared vehicle and house, or it may come down to valuable pieces of memorabilia and instruments. Go through your current estate plan line by line, and ensure that all pieces of property are updated.
Once you’ve tallied your personal property, update your personal financial assets. Start with your checking and savings accounts, as these will be straightforward. Next, take a look at investments – were they divided evenly? Who now owns what?
Lastly, look at your insurance policies. The value of most, such as your life insurance policy, will stay the same, but it’s important to account for any changes you may have made in the aftermath of the divorce.
Update Beneficiaries
The choice of who your beneficiaries are is one of the most personal decisions you’ll ever make on a legal document. If you parted ways amicably, there may not be many changes, but in many cases, a divorce does inspire considerable alterations in your beneficiaries, which will be listed on several documents in your estate plan.
One thing to keep in mind as you adjust your beneficiaries is that, if you do want to keep your ex-spouse listed, make sure to note that the plan was updated post-divorce, and the decision to include them is intentional. In many states, such as Colorado, the state will invalidate provisions to your ex-spouse – they’ll assume they weren’t intended. This is also true of your choice for power of attorney (sometimes called attorney-in-fact). If you’d like to keep your ex-spouse in this position, make sure to update both your health decisions and financial affairs documents.
However, this is not true of your life insurance and payable-on-death accounts! Unless you’d like your ex-spouse to receive the total sum in the event of your passing, make sure to update these documents. This is especially important if you’re planning on remarrying, or have other beneficiaries you’d rather receive the windfall.
Again, we urge you to seek legal counsel as you’re reforming your estate plan, as this is one of the few legal agreements you’ll enter into in which you’ll be unable to clarify or defend decisions once it’s in motion. Ensure that your estate plan is up to date, and that your assets, from your favorite guitar to your life insurance payout, goes to the people that deserve it.
