Divorce is a complex and stressful process that takes an emotional toll on both parties involved. However, it is essential to consider the legal and financial ramifications of divorce as well. One crucial aspect often overlooked is updating your estate plan after divorce. Many people forget to update their wills, trusts, and beneficiaries after a divorce, which can have significant consequences.
1. Understand Your Estate Plan Before Updating
Before making any changes to your estate plan, you should understand what it includes and how it works. An estate plan comprises several legal documents such as wills, trusts, powers of attorney, and healthcare directives. The terms and language used in these documents need to be carefully reviewed, especially after a divorce, to ensure that they align with your current wishes. You may have designated your ex-spouse as the beneficiary or executor of your estate, which must be changed immediately.
2. Update Your Will
Updating the will is essential after a divorce, primarily because the will often plays a central role in the estate plan. Divorce can impact the distribution of assets, and if you do not update your will, it may still reflect your original plan. You should review your will and change it based on your current situation. You need to name a new executor or personal representative and make changes to the distribution of your assets as per your wishes. If you have minor children, you should also name a guardian and consider setting up a trust for their benefit.
3. Revise Your Trust
If you have established a trust, you should take extra care to ensure that it is updated after a divorce. A trust may have been created primarily for your children or to benefit your ex-spouse, but that may not be how you want to distribute your assets now. Revision of the trust may be necessary, and you should consult with your legal advisor to ensure that all changes meet legal requirements.
4. Change the Beneficiaries
It is equally important to update the beneficiaries on all your accounts, such as 401k plans, life insurance, and retirement plans. Divorce can impact the distribution of your assets, and if your ex-spouse is still the beneficiary, they may be the one who receives the proceeds instead of the person you meant to. You should review your beneficiary designations on all your accounts and insurance policies and make changes as necessary.
5. Keep Your Estate Plan Up-to-Date
Your estate plan should consistently be updated regardless of whether you have experienced a significant life event like divorce. Keeping your estate plan updated ensures that your assets are distributed according to your wishes, minimizes tax implications, and avoids family disputes. Review your estate plan every few years or when any significant changes occur to ensure that it still aligns with your wishes and legal requirements.
Salt Lake City Family Lawyers
At Lokken & Putnam, P.C., our experienced estate planning attorneys understand the complexities of estate planning after a divorce. We can assist you in reviewing and updating your estate plan to reflect your post-divorce needs and protect your assets. Contact us today at (801) 829-9783 to schedule a consultation and take the necessary steps to secure your future.
