For most people, there are four main estate planning issues that are of concern during a divorce:
- How assets are divided now, and how they will be distributed after death
- Re-designation of beneficiaries
- Whether your spouse will still make decisions for you in the event you become incapacitated
- Control and management of certain assets
Couples contemplating a divorce should review their estate plan to determine the changes that will be necessary while a divorce is pending or once it becomes final – and should keep in mind that it is only final once a judge signs the final dissolution decree.
Here are some of the things you should consider in your estate plan if a divorce is pending:
Wills – if neither spouse has a will and one dies prior to the finalization of a divorce, the assets will go to the surviving spouse. If you do have a will, chances are your spouse is named as executor and primary beneficiary. You will likely want to change this.
Trusts – spouses typically name each other as the executor and sole or primary beneficiary of the estate in trust documents. If you have established a living trust, it will be very important to change it after the divorce is final.
Life Insurance Policy – if a couple has children, chances are that the surviving spouse is named as primary beneficiary and the children as secondary beneficiaries. There may also be stepchildren that one spouse has brought to the marriage that are listed as well. You should remove your spouse as a beneficiary.
Retirement Accounts – beneficiary designations on IRAs and other retirement accounts are usually a spouse; if these are not changed after a divorce is final and the account holder dies, the assets still go to the person named as beneficiary.
Powers of Attorney – if you have an estate plan in place, you have probably given your spouse a Durable Power of Attorney to handle your affairs in case of your incapacitation. If you have named your spouse in a Power of Attorney for Healthcare, they will have the power to make health care decisions for you. These should be changed immediately once a divorce action is filed.
Other Estates – your or your spouse may be named as a beneficiary of your parents’ or other relatives’ estates. If you inherit before the divorce is final, those assets will likely be considered when calculating spousal support.
Your legal team at Koenig|Dunne is here to provide you with guidance and advice regarding all of the issues that you will face throughout the estate planning process.
