estate plan after divorce,woman alone

When you go through a divorce, dealing with the legal and financial hurdles can seem like a never-ending process. Even if your split was amicable, the process almost certainly took time, and you probably spent a significant amount of time in the office or on the phone with your lawyer talking about all of the various issues you needed to address before the process mercifully came to an end.

But, you got through it. You and your spouse agreed on a division of your property, you have a parenting plan that you can live with (if you have children), and you have financial support rights or obligations that are consistent with your state’s child support and alimony laws. You are officially single, and you are ready to move on with the next stage of your life.

Inevitably, the process of moving on will mean looking back to certain decisions you made during your marriage or during the divorce process. Whether you are reorganizing your home, reorganizing your finances, or looking for new opportunities in life, your former marriage will likely continue to play a role – in one way or another – for years to come. But, there are various ways that former spouses can (and should) limit the consequences of decisions made in their past lives, and this is perhaps nowhere more true than in the context of their estate plans.

Modifying Your Estate Plan After Your Divorce

Do you remember the terms of your estate plan? If you are like most people, the answer to this question is, “No.” Most people have a general idea of the decisions they made during the estate planning process; but, they could not tell you the specifics, and if pressed they likely could not tell you if they signed a will, revocable trust, power of attorney and/or any of the other various typical estate planning documents.

If this is the position you are in, that is ok. But, it also means that you need to revisit your estate plan – sooner rather than later. If you prepared your estate plan while you were married, you likely agreed to leave some, if not all, of your assets to your former spouse, and he or she may still have healthcare decision-making authority in the event of incapacity as well.

While our current discussion is couched in terms of post-divorce estate planning considerations, it is important to note that, ideally, divorcing spouses will make any necessary modifications to their estate plans before the divorce process is complete. Estate planning is about preparing for the future, and you never know what the future holds. If you were to suffer a severe traumatic injury or suddenly fall ill, it could quickly become too late to make the changes to your estate plan that you now desire. As a result, regardless of your current marital status, now is the right time to focus on putting a revised estate plan in place.

As you work to revise your estate plan, it is important to proactively address the various ways that your divorce can come into play. For example:

  • As a result of the distribution of your marital estate during your divorce, what specific assets do you have remaining to address in your estate plan? Given that your marital estate has now been divided, do you now have different desires regarding the distribution of your remaining estate?
  • Is your former spouse designated as a beneficiary on any bank accounts, retirement accounts, health savings plans, life insurance policies, or elsewhere? If so, who do you want to name as the replacement beneficiary? Keep in mind that, if you do nothing, your former spouse will remain entitled to his or her current beneficiary status even despite your divorce.
  • If you have an obligation to pay alimony or child support (or both), how will this affect your savings and accumulation of wealth, and how will this impact your estate planning goals?
  • Did you grant your former spouse a power of attorney or name him or her as your decision-maker in an advance health care directive? Healthcare planning is an important part of the estate planning process, and it is an issue that should not go overlooked when revising your estate plan as the result of a divorce.

Creating a Post-Divorce Estate Plan

If you do not currently have an estate plan, getting divorced is yet another reason to commit to putting a plan in place. Along with the direct benefits of preparing an estate plan, going through the estate planning process can also help you discover and address other issues that you may not have thought of in the course of your everyday life. For example, when you are no longer married, do you know who you want to have manage your finances and communicate with your doctors if you are unable to do so independently? Should you consider life or long-term care insurance? If so, who do you want to name as your beneficiary (or beneficiaries)? Do you need to be concerned about estate or gift tax implications?

There are numerous considerations that go into crafting a thorough estate plan, and you need to make sure that all of your estate planning documents are consistent so that your children and other loved ones do not face unnecessary uncertainty after your passing.

What if My Spouse (or Former Spouse) and I Have a Joint Estate Plan?

Although joint estate plans have waned in popularity, they were once a preferred option for married couples seeking to minimize costs and simplify the estate planning process. These days, preparing a comprehensive personal estate plan does not have to be expensive, and the drawbacks of having a joint plan will typically outweigh any countervailing considerations of cost-savings or efficiency.

If you and your spouse (or former spouse) have a joint estate plan, understanding your options will require a careful review of your plan’s operative terms. Generally speaking, it is in both parties’ best interests to be able to terminate a joint plan upon divorce; and, ideally, your current plan will include provisions that give you the flexibility you need to create a new plan without your spouse’s (or former spouse’s) involvement.

Practical Considerations: Estate Planning During or After Divorce

While revising or crafting your post-divorce estate plan, there are certain practical considerations that you will want to keep in mind as well. For example:

  • Re-titling Assets – If you took sole possession of any jointly-titled assets (such as a home or vehicle) in your divorce, you will want to make sure that these assets are appropriately re-titled to reflect your individual ownership.
  • Securing Documentation – Try to make sure you have access to all of the financial and legal documents you or your loved ones may need in the future; and, if you are revising (or terminating) a pre-existing estate plan, make sure you have clear documentation that your prior estate plan is no longer legally-enforceable.
  • Changing Passwords – If your former spouse has access to any of your passwords for financial, email, social media, or other online accounts, make sure you change your passwords so that he or she cannot access (and potentially change) your personal records and information.
  • Maintaining Flexibility – A quality estate plan will provide certainty for the future while also preserving the flexibility you need as circumstances change over time. When preparing your new estate plan, make sure you understand all of the options you have available so that you can make informed decisions about preserving your wealth for future generations.

Jiah Kim & Associates | Global Estate Planning Attorneys

If you would like to speak with an estate planning attorney about modifying or creating an estate plan after your divorce, we encourage you to contact us for a confidential consultation. To schedule an appointment at Jiah Kim & Associates, please call (646) 389-5065 or inquire online today.

This blog post is written for educational and general information purposes only, and does not constitute specific legal advice. You understand that there is no attorney-client relationship between you and the blog publisher. This blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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