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Divorce is a significant life event that brings a sea of changes. What many divorcées don’t realize is that this new beginning requires updating your estate plan. It is critical that your plan reflect your updated circumstances accurately, to prevent unintended results. Here's a comprehensive guide to estate planning after divorce, ensuring your wishes are honored and your legacy protected.
Reassess Your Beneficiaries and Estate Documents
1. Update Beneficiary Designations
Review and update beneficiary designations on retirement accounts, life insurance policies, and other financial instruments to reflect your current wishes. Often, this means removing your ex-spouse as a designated beneficiary. Similarly, ensure that beneficiary designations on bank accounts, stocks, and other investments are adjusted as necessary.
2. Revise Your Will
Consider appointing a new executor/trustee to manage your estate in line with your post-divorce wishes. Most married couples name each other as initial executor – this likely no longer serves your interests post-divorce. Also, revisit asset distribution instructions, especially if your divorce settlement involves the division of assets or changes in beneficiaries.
3. Consider a Trust
Establish trusts to protect assets for your children's inheritance, especially if they're minors or from a previous marriage. Trusts are excellent tools to manage assets in the event of your incapacity, and also to provide financial oversight to children in the event of your death. Trusts can provide creditor protection to minors, protecting them from their own mistakes. Trusts can also care for other loved ones, including pets.
4. Nominate Guardians for Minors
If you have minor children, designate a guardian to care for them in case of your incapacity or passing. Appoint a trustee to manage any assets or inheritance for your children until they reach a specified age or milestone. You may not want this trustee to be your ex-spouse.
5. Update your Power of Attorney
An agent named in a Power of Attorney can oversee finances and make financial decisions in the event of your incapacity. If you previously named your ex-spouse as primary agent, you will likely want to name a new agent so that your ex-spouse is not charged with financial decisions if you are unable to make them. Also seriously consider naming successor agents to serve in case your primary agent is unavailable when needed.
6. Update Healthcare Directives
Revise healthcare directives to appoint individuals who align with your current wishes regarding medical care and decision-making, and to manage your final wishes.
Protect Yourself Moving Forward
7. Review Property Ownership Documents and Consider Tax Implications
Review property titles and consider changing ownership or updating titles as per the divorce judgment. Consult with a tax advisor to understand the tax consequences of your new estate plan, especially considering any changes in assets or property division post-divorce.
8. Consult Legal and Financial Professionals
Work with an Estate Planning Attorney to ensure your documents accurately reflect your wishes post-divorce. Collaborate with a financial advisor to ensure your estate plan aligns with your overall financial goals and investment strategies.
Conclusion
Estate planning is not a one-time task. It is crucial to periodically review and update your plan, especially after significant life events like remarriage, the birth of children, acquiring substantial assets, or post-divorce.
Divorce necessitates a careful reevaluation of your estate plan to ensure your legacy reflects your current intentions. By updating your estate planning documents, you can protect yourself, your loved ones, and your assets, providing peace of mind for the future.
*Remember, each individual's situation is unique, and seeking personalized advice from professionals is invaluable in navigating the complexities of estate planning after divorce. Legacy Wealth Counsel is proud to provide legal services to divorcees seeking to update – or create – a thorough estate plan.
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