Following your divorce, you should meet with your estate planning attorney to get a better idea of how your pending divorce could change your future estate planning needs.
1. Who holds your medical power of attorney?
You and your spouse may have chosen to assign medical power of attorney to a specific individual, who might be a member of either your family or theirs. Following your divorce, you might want to change that medical power of attorney to someone you, specifically, trust, rather than the person your spouse chose. Do you have documentation naming your spouse as your medical power of attorney? You may want to change that documentation to someone else as well.
On the other hand, if you do not have a current medical power of attorney, now could be the ideal time to consider who you want to make medical decisions for you in the event of an emergency. Consider who would, by default, end up making that decision for you if you couldn’t make it for yourself, and make sure you update your medical power of attorney to reflect your current needs.
2. Who holds financial power of attorney for you?
Like your medical power of attorney paperwork, financial power of attorney will allow someone to make financial decisions for you if, for some reason, you cannot make them for yourself. Check your financial power of attorney paperwork and designate someone that you trust.
Keep in mind that if you have current financial power of attorney paperwork that places your former spouse as your power of attorney, that will still hold unless you make other provisions.
3. How does your will distribute your assets?
Often, wills contain specific policies that will distribute your assets to your former spouse first. If you do not update your will, your spouse will still receive everything. After your divorce, talk to your estate planning attorney about the distribution of assets in your will, including where you really want your money and other assets to go.
You should also carefully consider a will that provides an inheritance for your minor children. Much of the time, if your minor children inherit, the court will name the surviving parent as guardian, and the guardian will have financial control over the child’s assets until that child turns 18.
If you do not want your former spouse to have access to those assets, you may want to set up a trust for your minor child or designate someone other than your spouse to manage those funds for your child–either a custodian, who can manage the funds until your child turns eighteen, or a trustee, who can manage those funds for a longer period of time.
4. Who is named as the beneficiary on your life insurance policy?
Your life insurance policy or policies will likely name your spouse as the primary beneficiary if something happens to you. In some cases, your divorce decree may require you to have a life insurance policy that will pay out to your former spouse.
For example, if you need to pay alimony to your spouse for a specific period of time, or you have several minor children and your spouse worries about paying for their needs, you may want to have a life insurance policy that will ensure that they receive the funds they need. On the other hand, if you have completely separated your assets and have no need to provide for your spouse in the event of your death, you may want to change the beneficiary on your life insurance policy.
Make sure you take a look at all of your policies, including private policies and policies through work.
Often, people carry multiple policies in order to maximize the protection they can provide for their loved ones after their death. Any policy that you do not change will go through according to its terms at the time of your death, so if you don’t want your former spouse to benefit, you should change them as soon as possible.
5. Who is named as the beneficiary of your retirement accounts?
Retirement accounts also pass to a named beneficiary on your death, including your 401(k), your IRA accounts, your 403(b) accounts, and more. In most cases, the secondary beneficiary on those accounts will be your spouse, which means that your spouse will inherit your retirement accounts if you die before you access or empty them.
Take a close look at your retirement accounts as you manage the paperwork associated with your divorce. Some accounts, including ERISA accounts, may need your spouse’s consent, which you may need to procure along with the rest of your divorce negotiations. Others, you can change without the consent of your spouse. It’s critical, however, to carefully manage your retirement accounts and make any needed changes as soon as possible.
6. Who receives custody of any minor children if something happens to you, especially if you have primary custody?
In most cases, the courts will designate the child’s other parent as their legal guardian if something happens to you, including your death. Sometimes, however, you may have a situation in which the child’s other parent cannot take care of the child, often due to abuse. If you have sole custody of your child in the aftermath of the divorce, you may want to work with your lawyer to clearly lay out who you want to take guardianship of your child in the event of your death.
We Can Help Update Your Estate Plan After Divorce
Managing your estate plans can prove complicated at the best of times. After a divorce, you may need to revisit the plans you’ve already made to make sure they fit your new circumstances. We know planning after a divorce can be a difficult time, but here at McCollum Law, we can help. Contact us today to learn more about your estate planning needs after divorce.