A divorce process is never easy nor quick. Addressing your estate plan is one of the top priorities during this difficult time. While the divorce process unfolds, your spouse will have certain rights. Here is a list of 8 things you need to prioritize at this time.
1. Update Your Health Care Proxy
Carefully think about what would happen if you were in a serious car accident and ended up in the ICU. Who will be responsible for making your health care decisions at that point? Chances are you may have a health care proxy which gives your spouse the right to make such decisions. You may want to alter this designation prior to finalizing a divorce.
2. Change Power Of Attorney
It’s likely you and your spouse executed power of attorney at some point during your marriage. If it is a durable power of attorney, it gave your spouse access to assets in your name solely. In this case, it can be concerning considering if the divorce is not amicable. You should revoke this power of attorney, and execute a new one. You can also provide your spouse with notice of the change ahead of time. This process is typically executed through your attorney.
3. Figure Out What You Can And Cannot Alter
In the majority of states, you are not able to change the beneficiary designation of retire accounts, plans, pensions or life insurance during a divorce process. Typically, these designations must stay in place until the divorce is finalized. The filing of a complaint for divorce will place an automatic restraining order on your assets, including beneficiary designations.
4. Update Your Will
If your state does allow you to execute a new will, it’s wise to do so. Ask yourself if you’d really want your current spouse in charge of your estate. The time is now to remove him or her as executor. So what about guardianship of minor children? You will most likely not be able to prevent your current spouse from being guardian of your children in the event of your death. However, it is possible for you to name an alternate guardian.
5. Decide What To Leave Your Spouse
Is it the right move to disinherit your spouse? There are a few nuances to consider here. Most states will not let you disinherit a spouse completely. If you did, he or she would have the right to contest the will and receive some percentage of your assets.
Oftentimes, clients will leave the spouse only what he/she is entitled to receive under state laws. Other clients may take a more aggressive approach, wishing to make their spouse fight for the money.
6. Review Your Prenuptial Agreement
If you have a prenuptial agreement in place, you need to review this to see what your spouse is entitled to in the event of your death. Your new estate plan needs to be consistent with the terms of your prenuptial agreement.
7. Amend Your Trust
If your state allows individuals to amend their revocable trust, do this as soon as possible. The key issue here is which assets you want to leave your spouse. If there happen to be any gifts left for his/her family, you may want to remove them. Another issue to consider is trust provisions for young children. Do you wish to have your spouse managing monies for your children? You should have a revocable trust that will name someone of your choosing as trustee if you have minor children. Otherwise, your spouse will have access to your assets for them if you die.
8. Revisit Your Plan Once Divorce Is Finalized
Estate planning is often a temporary measure taken during a divorce process. Once the process is finalized, you must revisit the estate plan and see if anything needs to be updated following a divorce. Do not overlook these beneficiary designations.
- Fletcher, Christine. (2018, Jun 19). 8 Estate Planning Moves If You Are Getting Divorced. www.forbes.com. Retrieved September 27, 2022, from https://www.forbes.com/sites/christinefletcher/2018/06/19/8-estate-planning-moves-if-you-are-getting-divorced/?sh=709384a16419
There’s nothing better than the peace of mind you will have knowing you’ve protected your family at a time when they need it most. Let us help. Schedule a consultation or contact Ogborne Law, PLC of Arizona today.