How To Update Your Estate Plan After Divorce

When “I Do” Becomes “I Don’t”

It’s wedding season, and many couples look forward to celebrating their love with their family and friends. Weddings are meant to symbolize the commitment you have to one another “until death do us part.”

However, the reality is that not all marriages last forever. According to the American Psychological Association, about 40 to 50 percent of married couples in the United States end up getting divorced.

How Divorce Impacts Your Estate Planning

Divorce is not only a personal and emotional matter, but also a legal and financial one. It can significantly impact your estate plan, or the documents and arrangements that determine how your assets and affairs will be handled after your death or incapacity. Your estate plan may include a will, a trust, a power of attorney, a health care proxy, a living will, and beneficiary designations for your retirement accounts and life insurance policies.

If you get divorced, you may need to update your estate plan to reflect your new situation and wishes.

7 Steps to Updating Your Estate Plan After Divorce

1. Your will and trust

Your will and trust are the documents that specify who will inherit your property and who will manage your estate after your death. If you have named your ex-spouse as a beneficiary or an executor/trustee, you may want to choose someone else. In some states, divorce automatically revokes any provisions in your will or trust that favor your ex-spouse, but in other states, you have to make the changes yourself. You may also want to update your will and trust to include any new beneficiaries, such as your children, relatives, or friends.

2. Your power of attorney and health care proxy

Your power of attorney and health care proxy are the documents that authorize someone to act on your behalf in financial and medical matters if you become incapacitated. If you have appointed your ex-spouse as your agent, you may want to revoke it and appoint someone else. You may also want to update your living will, which is the document that expresses your wishes regarding end-of-life care.

3. Your beneficiary designations

Your beneficiary designations are the forms you fill out to name who will receive the proceeds of your retirement accounts and life insurance policies when you die. These forms override your will and trust, so you must make sure they are consistent with your estate plan. You may want to name someone else if you have designated your ex-spouse as a beneficiary. You may also want to review your beneficiary designations if you have to pay or receive alimony or child support, as these obligations may affect your retirement and insurance planning.

4. Your joint accounts and property

If you have any joint accounts or property with your ex-spouse, such as bank accounts, credit cards, mortgages, or deeds, you may want to close or transfer them to your name. This will prevent your ex-spouse from accessing your funds or assets or being liable for your debts. You may also want to update your title and registration for your vehicles, and your homeowner’s or renter’s insurance for your residence.

5. Your tax situation

Divorce can affect your taxes in several ways. For example, you may have to file your taxes as single or head of household, instead of married filing jointly or separately. You may also have to claim or pay alimony or child support, which are taxable or deductible depending on the circumstances. You may also have to deal with the tax consequences of dividing your property, retirement accounts, or selling your home. You may want to consult a tax professional to help you understand and plan for your tax situation after divorce.

6. Your estate planning goals and strategies

Divorce can change your estate planning goals and strategies depending on your new circumstances and wishes. For example, you may want to increase or decrease your estate tax exemption or create or modify a trust for your children or other beneficiaries. You may also want to consider how divorce affects your long-term care planning, charitable giving, or business succession planning.

7. Regularly review your estate plan

Your estate plan is not a one-time document, but a living and evolving one. You should review your estate plan regularly, especially after any major life events, such as marriage, divorce, birth, death, or disability. You should also review your estate plan if there are any changes in the law, the economy, or your personal or financial situation. By reviewing your estate plan regularly, you can ensure that it reflects your current needs and wishes and protects your interests and loved ones.

Contact Frazier Law for Estate Planning After Divorce

If you are going through or have gone through a divorce, you may need to update your estate plan to avoid any unwanted or unintended consequences. We can help you navigate the complex and sensitive issue of estate planning after divorce.

At Frazier Law, we are prepared to help you create or modify your estate plan to suit your new situation and goals, and to ensure that your assets and affairs are handled according to your wishes. Contact us today at (615) 267-0125 to schedule a consultation.