Divorce is one of the most disruptive experiences an adult can weather. The end of a marriage changes their finances and living arrangements. Their schedule may also shift dramatically, especially if they must share custody of their children with their spouse.
Many people focus on the divorce process itself, rather than the vulnerability they may experience after the end of a marriage. People who have just ended a marriage may also need to make some major estate planning adjustments to better protect themselves and their legacy.
What updates are generally necessary when modifying an estate plan after a divorce?
1. Removing a spouse from documents
Frequently, people make their spouses their primary beneficiaries in their estate plans. They then need to make dramatic revisions to the documents after ending the marriage. Removing a spouse if they are a beneficiary listed in a will or trust is important. Removing them from positions of authority is also critical. Divorced individuals may even need to file new paperwork with their life insurance companies to ensure that an ex-spouse isn’t the primary beneficiary of a life insurance policy.
2. Preserving the children’s inheritance
In some ways, meeting the needs of children with an estate plan after a divorce becomes easier. The likelihood of both parents dying simultaneously decreases when they no longer live together. Therefore, guardianship becomes less of a concern. However, parents may need to consider how to preserve an inheritance for their children. Establishing a trust is one way to ensure that the surviving parent does not misuse the resources intended for the children.
3. Empowering trusted individuals
Married people may benefit from drafting powers of attorney but can rely on their spouses in an emergency. A spouse usually has access to financial accounts, incoming mail and medical documentation. Without a spouse, people may need to establish powers of attorney to ensure they have support if they become incapacitated. An advance directive explaining personal preferences can also be important when the people assuming authority may be less familiar with an individual’s current preferences.
Updating an estate plan to reflect the reality of life after divorce is important. People who modify and expand their documents can more effectively protect themselves and their loved ones after major changes to their lives.
