An estate plan is an end of life plan that encompasses an individual’s will and other documents that outline how the individual wants their property to be distributed when they pass away. An estate includes all of an individual’s personal belongings, real property, and intangible assets, such as patents or copyrights.
If that property has any taxes or debts attached to it, those would also be included as part of the individual’s estate. Estate laws are based on the state and local statutes in a jurisdiction.
This means that the laws may vary depending on the state where an individual resides. These different laws may affect how an individual’s property gets distributed to spouses, children, and other recipients when they become incapacitated, deceased, or divorced.
Having an estate plan will ensure that an individual’s property is distributed as they wish and to whom they wish, especially after a divorce. A divorce is a legal procedure that dissolves a marriage.
A divorce decree is a final ruling from a court that provides a judgment and order that makes the termination of the marriage official. All divorce decrees will be different, based on the unique facts of each case.
A divorce decree outlines the rights and duties of each of the parties as related to the divorce as well as provides instructions regarding the division of property and child custody, if applicable. Divorce proceedings may affect many different areas of an individual’s life, including:
- Debt;
- Property possession;
- Taxes;
- Employment benefits; and
- Other legal rights.
Because of these issues, an individual may want to consult with an attorney both during their divorce proceedings and once they have concluded, to ensure that their estate plan still reflects their most current wishes.
Do I Need to Revise My Beneficiary Designations?
It is essential for an individual to review their beneficiary designations following any major life events, including divorce, birth, and death. Beneficiaries are individuals, organizations, or entities that are named in a will as being designated to receive a legal benefit.
Typically, the benefit will be in the form of personal property or real property. An award, or designation, or property to a beneficiary is referred to as a distribution.
If an individual has gone through a divorce, there may be parties who were included in their estate plan that they no longer want or need to include, such as their ex-spouse and members of their family. This may also apply to other issues, including insurance policies and retirement accounts.
Do I Need to Update My Will and Trusts?
A will is an estate planning instrument that takes effect upon the death of the individual who created it. As the will is one of the main documents containing instructions about an individual’s estate, it is essential that they update this document after any major life changes, such as a divorce.
The same applies to any other estate planning tools an individual uses, such as a trust. Trusts direct individuals, called trustees, to hold the trustor, or owner’s, property for the benefit of other individuals, called beneficiaries. Trusts may be created for many different reasons, such as:
- Financial benefits for the creator;
- Financial support for a surviving spouse; or
- A charitable purpose.
Typically, beneficiaries include spouses, children, and grandchildren. However, friends, pets, and co-workers may also be beneficiaries, depending on the type of trust.
If an individual created a trust prior to their divorce, they will likely need to update their beneficiaries. In the alternative, they may have received property or money from their divorce that they want to place in a trust for another, such as their children.
It is important for an individual to update both their will and any trusts to ensure that their property does not go to their ex-spouse or any other individual they do not desire.
What About Power of Attorney and Healthcare Directives?
A power of attorney is a legal document that provides an individual the authority to act on behalf of another individual. The individual who is given authority is the agent, or attorney-in-fact. The individual whom the agent can act on behalf of is the principal.
Powers of attorney can be used for general and specific purposes. A general power of attorney provides an agent with all of the powers and rights that the principal possesses.
For example, a general power of attorney may authorize an agent to:
- Sign documents;
- Pay bills; and
- Make all decisions related to the principal’s real and personal property.
A power of attorney usually goes into effect when an individual is incapacitated. It, however, may also go into effect in other situations, such as:
- According to a date that is stated in the power of attorney document;
- If the individual is out of country or cannot be present to sign a document;
- According to verbal instructions; and
- If the individual has become unable to make their own legal decisions.
A health care directive, or advanced directive or medical directive, is a legal document that outlines an individual’s requests regarding their medical treatment when they do not have the physical ability to make and communicate their decisions for themselves. Typically, these documents will appoint a healthcare agent who has the power to make decisions on behalf of the incapacitated individual.
Healthcare providers are required to follow valid directives. If an individual goes through a divorce, they will need to update these documents, as they typically designate an individual’s spouse as their agent.
Do I Need to Review the Child Guardianship Designations?
Yes, if an individual is going through or has gone through a divorce, it is important to review the child guardianship designations they made in their estate plan to ensure they still apply. For example, in some cases, an ex-spouse may still want the biological father or mother of the child to be designated as their guardian in the event of their death.
In other cases, there may be circumstances in which an individual may not want their ex-spouse to be designated as the guardian of their child should they need one. In these cases, the individual will need to update their estate plan to reflect the new individual that they want to care for their child or children if they pass away.
It is important to consider what will be in the best interests of the children as well as ensure that the individual who is chosen is responsible and able to handle caring for children.
How Do I Manage Shared Assets?
When a couple files for divorce, one of the many legal issues that will be addressed in the divorce will be the division of assets, which can include:
- Cash;
- Property, whether real or personal; and
- Anything with monetary value.
If a divorce is amicable and uncontested, the couple may agree on how the assets will be divided. This is often the best option, as it may save both parties money by reducing court costs and attorney’s fees.
If the spouses cannot agree on a fair division of their marital assets, which means it is a contested divorce, the issues will be resolved by the court during formal divorce proceedings. It is important to be aware that the division of marital assets can vary greatly by state.
Because of this, an individual should consult with a local attorney for advice regarding obtaining and protecting their property during the divorce and updating their estate plan once they obtain the divorce property they are awarded once the proceedings conclude.
Should I Consult with Professionals?
Yes, it is essential for an individual to consult with professionals to obtain advice regarding their estate planning when they go through a divorce. There are numerous different types of professionals an individual can consult with, including, but not limited to:
Consulting with professionals can help ease the stress that comes with major life changes and updating an estate plan as well as help ensure that their plan is valid and enforceable under the laws of their state.
Should I Consult with an Attorney?
Yes, if you are considering an estate plan or have an estate plan already and you are dealing with a divorce, it is essential to consult with a local family lawyer. Your lawyer can help you with the entire estate planning process, including advising you of the best tools to use for your situation, drafting your documents, and storing them for safekeeping.
Having an attorney will help reduce the probability of any future issues arising by advising you of the specific laws in your state and how they may affect the outcome of your case. Your attorney can help ensure that you plan sufficiently so that, in the future, your loved ones will receive the property you want them to, according to your wishes.
