When your divorce is finalized, it is important to update your estate plan so that your will, healthcare power of attorney, financial power of attorney and trust documents accurately reflect your new marital status. While some states and courts will use their discretion in invalidating references to ex-spouses listed in estate planning documents, the majority rule requires you to make updates. In addition to traditional estate planning updates, you should review your life insurance, bank accounts and any financial investments or assets that designate another person to whom the benefits would be payable upon death.
Meanwhile, with experienced divorce lawyers Collin County TX has come to trust, you can discuss a premarital agreement you would use if you were to remarry. When there are children of a previous relationship, a premarital agreement can ensure your children will still inherit your estate and not your new spouse.
The following estate planning documents should be updated:
- Your Will: The best course of action after a divorce is to have a new will prepared, which will revoke the prior will which named your former spouse. If you were to leave your old will in place and you pass away, your ex-spouse could claim their share of your estate as the will is written. If this happens and you have children, there is no guarantee they will receive anything under the will.
- Power of Attorney for Healthcare: Should you become temporarily or permanently disabled, or are simply under anesthetic for a surgical procedure, the person you have given power of attorney can make all healthcare decisions as you would do. Failing to update your healthcare power of attorney could put your ex-spouse in the position to make choices you might regret. Additionally, if your power of attorney for healthcare is someone with whom you are estranged, they might not even be available if the required conditions and need were to arise.
- Power of Attorney for Finances: After spending time and resources protecting your rightful share of money and property, allowing your former spouse to have access to your accounts, sign checks and enter into agreements in your name could be disastrous. While we do not presume that people will do the worst things to others, why leave the key out on the table when you can better protect yourself by updating your financial power of attorney and naming a new person to have control over your finances if you become disabled or unavailable.
- Revocable Trusts: If you have a revocable living trust, it is important to update the documents to prevent your ex-spouse from becoming a trustee or beneficiary. If, however, your trust is irrevocable, you will not be able to change the beneficiary designation from your former spouse to another. With trusts established for children, there should be no need to make any changes. Trusts are useful to shelter assets and monies held by a trustee bank or law firm with instructions as to how and when to pay your named beneficiaries, such as your children.
- Beneficiary Designations: Any financial policy you may hold will contain a beneficiary designation through which your name the person other than yourself who will be legally entitled to receive the asset value named in the policy at the time you pass away. Life insurance, bank accounts, investment plans and pensions all contain beneficiary designations and if you fail to change them when you divorce your spouse, they will still be legally entitled to receive all the money in your policies and accounts if you pass away.
We all work hard for our money and assets and failure to be proactive could mean our savings falls into the wrong hands. At the end of your divorce, do not delay in updating your estate plan, especially if you have children.
Thanks to our friends and contributors from Scroggins Family Law for their insight into estate planning and divorce.