Going through a divorce is a significant life change that can feel stressful, overwhelming, and emotional. This may cause you to miss how your estate plan could be affected by this new status. We highly recommend beginning the process of adjusting and updating your estate plan immediately. The earlier you get started on this process, the better. Until your divorce is legally finalized, you are still considered married which then affects your estate plan if you were to die or become incapacitated. This means that all your assets and life would be in the hands of your ex-spouse. This is something that could be easily avoided by speaking with an estate planning attorney at North County Legal. Throughout this blog, you will notice a common theme; begin this process as soon as you become aware a divorce will be happening, regardless of it being legal or not.
Here are the four crucial steps to follow as you are going through the process of getting divorced:
1. Update your power of attorney documents.
We recommend updating your financial and medical power of attorney documents as soon as possible. This is important because in the chance that you become incapacitated or die before your divorce is finalized, your ex-spouse would gain the complete authority over all your legal, financial, and medical decisions. This can be very discomforting which is why it is best to update both of your power of attorney documents as soon as you become aware of the divorce.
2. Update your beneficiary designations.
It is important to update your designated beneficiaries for assets that would not pass through a will or trust. This includes bank accounts, life insurance policies, and retirement plans. If you do not choose to update your beneficiaries, this could cause you serious trouble in your future.
It is very important to note that once you or your spouse file divorce papers with the court, neither of you can change your beneficiaries without the other’s permission until your divorce is final. If you know you will be getting a divorce soon, you should consider changing your beneficiaries prior to filing divorce papers. If this is not an option for you now, we recommend that as soon as the divorce is finalized updating your beneficiary designations should be your first priority.
3. Update your will or create a new one.
If you do not want your almost-ex-spouse to be handling your estate plan, you need to create a new will as soon as possible. As mentioned earlier, in the case that you pass away or become incapacitated before your divorce is finalized, your ex will have access to anything in your name. If you choose to create a new will, you could assign new beneficiaries and remove your former spouse in all, if desired.
Please note that state laws vary widely with how a divorce can affect a will. Some states have community property laws that would grant your ex-spouse a certain portion of the marital estate upon your death, regardless of what your will declares. In this case, if you did die before the divorce is finalized, you will not be able to fully disinherit your spouse through the new will.
Another important part to note is that once the divorce becomes official, your old will is not immediately revoked. Like mentioned earlier, state laws vary when it comes to divorce and wills. Some states do automatically revoke old wills once a divorce is final. Other states will deem wills valid even after a finalized divorce, unless officially revoked by yourself.
Because of the state laws varying from state to state, we highly encourage you to consult with an attorney as soon as you become aware of the divorce. An attorney will be able to best assist you in properly navigating these laws when creating your new will and help you avoid any mistakes.
4. Update your existing trust or create a new one.
If your ex-spouse is a beneficiary on any of your revocable living trusts, you may want to update that as you desire. State laws vary widely with how a divorce can affect a trust as well. Because of this, we recommend scheduling a consultation with an attorney as soon as you can.
We highly encourage you to create a living trust. Trusts are very helpful and useful for parents with minor children and especially blended families. Living trusts protect your assets that you desire to pass on to your children as well. Trusts can provide many features and powers that a will cannot. In the chance that you and your ex-spouse will form new families, this is something we recommend considering.
When your divorce becomes finalized, we encourage you to look over and update your estate planning documents based on your new asset profile and living situation. Your estate plan should be evolving as you experience life changes, especially if you are getting remarried, having more children, or when a close family member passes away.
We recognize that going through a divorce is never easy. Making sure to update and adjust your estate plan during the process will save you from many additional, unnecessary headaches and stressors. At North County Legal, we aim to support clients during this difficult process to make sure their best interests are protected and secured.
Contact us today to get started with your consultation.