With or without children, divorce is a complicated transaction, with many moving parts. Things happen during a divorce, which can sometimes take years to complete. One part that is often overlooked is the estate plan, which should be updated as early in the process, as possible.
What would happen if your soon-to-be ex-spouse became very sick or died during divorce proceedings? If his or her estate plan wasn’t updated, you could be the one making health care decisions or inheriting everything. That’s why the recent article, “5 Estate Planning Moves If You Are Getting Divorced” from the Journal Enterprise, says not to forget about getting your estate plan updated.
Medical Power of Attorney. This is also called a healthcare proxy. This person is named to make decisions on your medical care, if you’re ill or injured and can’t state your medical care decisions. Unless you make the change, your soon-to-be ex-spouse will have this right.
Financial Power of Attorney. Like a healthcare proxy, this is someone you select to take charge, if you become incapacitated. This person has authority over your financial decisions, and it means they have the authority to pay your bills, access your bank and investment accounts, collect and cash your paychecks, and make financial decisions for you. You want to be certain that your assets are protected and your financial obligations are met, while you’re unable to act on your own behalf. Most people name a spouse, but if you are in the process of divorce and don’t switch this designation, your soon-to-be ex-spouse will still be your financial power of attorney and will retain access to your finances.
Create a List of Things to Change After Your Divorce. A divorce can freeze some assets and accounts, which remains in effect until it’s finalized. Therefore, you won’t be able to change the beneficiary on life insurance policies, pensions and other types of accounts. Ask your estate planning attorney to find out exactly what accounts will be affected. Once you know which ones are frozen, you should make a list to ensure you won’t neglect to change them, when the divorce is finalized.
Modify Your Will. In some states, you may not be permitted to create a new will, but your attorney should still be able to help you make the necessary changes. You’ll want to review your heirs. If you do have minor children and you have sole custody, you may want to designate another person as their guardian. If you named your spouse as the personal representative of your will, you may want to consider changing this designation.
Modify Your Trust. In addition to a will, you may have a revocable living trust . One of the advantages of a revocable trust is that it doesn’t go through probate, so your heirs avoid the costs of probate and keep your affairs private. If you have a revocable trust, talk to your attorney about how you can transfer assets out of the old trust, revoking it if was a joint trust with you ex-spouse, and creating a new individual trust for your needs.
Divorce is an overwhelming process, and one that feels like it will take forever. You might feel like estate planning is the last thing you want to deal with, but it may be wisest to make it one of the early tasks in the process.
Contact the Soto Law Firm today to schedule a free consultation to discuss what options are right for you following your divorce.
Reference: Journal Enterprise (March 20, 2019) “5 Estate Planning Moves If You Are Getting Divorced”