No one gets married expecting to get divorced, but unfortunately, it happens. If you find yourself in the midst of a divorce, there are a lot of things to think about—and estate planning is one of them.
What is estate planning?
Estate planning is the process of arranging for the management and disposition of a person’s property after death. This generally involves creating a will, naming an executor, and appointing trustees to manage any trusts that are established. It can also include setting up a living trust or creating a last will and testament.
Here are four key considerations from experienced divorce lawyers and estate planning lawyers to keep in mind as you navigate this challenging time.
1. Make a will
If you don’t already have a will, now is the time to make one. A will is a legal document that outlines your wishes for how your assets will be distributed after your death. While it may seem like a morbid task to think about during a divorce, it’s important to have a will in place in case something happens to you. If you die without a will, your assets will be distributed according to state law, which may not be what you want.
2. Revoke any existing powers of attorney
A power of attorney is a legal document that gives someone else the authority to make decisions on your behalf. If you have given your spouse power of attorney, you need to revoke that authority as soon as possible. Otherwise, they could make decisions about your finances or healthcare that you may not agree with.
3. Change the beneficiaries on your accounts
If you have any accounts with beneficiary designation—such as life insurance policies, retirement accounts, or annuities—you need to change the beneficiaries on those accounts. Otherwise, your ex-spouse could still inherit your assets even if you don’t want them to.
4. Create (or update) a trust
A trust is an arrangement whereby you transfer ownership of your assets to another person (the trustee) for the benefit of someone else (the beneficiary). Trusts can be created for both estate planning and tax purposes. If you have a trust, it’s important to review them and make sure they still reflect your wishes. If you don’t have a trust, now might be the time to create one—especially if you have young children who would need someone to manage their inheritance if something happened to you.
Creating or updating a trust is an important step in estate planning during divorce because it allows you to control what happens to your assets after your death. Without a trust, your assets would be distributed according to state law—which may not be what you want.
Estate planning during the divorce process can be complex, but it’s important to take the time to do it right. By considering these four key factors, you can ensure that your assets are protected and distributed according to your wishes—not the state’s wishes.