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Divorce and your estate plan: What steps should you take?

On Behalf of | Jun 18, 2024 | Estate Planning |

During the stress of divorce, it can be easy to overlook important things like updating your estate plan. However, making sure your estate plan reflects your new life circumstances is crucial. What should you know about updating your estate plan during the divorce process?

Review your plan and make updates.

First, look over your existing estate plan and revise it. You may need to change your will to update who will inherit your assets. Often, people choose their spouse as their main beneficiary. If you’re divorcing, you might want to choose someone else, like your children, a relative, or a close friend.

During a divorce, it is also important to review and change who has power of attorney. Be sure that the person you name is someone you trust to make medical or financial decisions on your behalf. If your spouse is currently your power of attorney, you might want to appoint another trusted person instead.

Update your beneficiaries on other accounts and policies.

People often forget to update their life insurance policies and retirement accounts. Your will does not cover these accounts, so you need to update them separately. Make sure you have listed the right people as beneficiaries.

Create a plan for your kids.

If you have minor children, deciding who will take care of them if something happens to you is crucial. Your changing situation may mean that the person you named before is no longer someone you trust to raise your children. Make sure your estate plan clearly states your wishes.

Consider ways to protect complex assets like businesses.

If you own a business, your divorce might affect who owns and manages it. Review your estate plan to ensure your business goes to the right person and your ex-spouse does not inadvertently inherit control.

Keep your divorce documents.

Once your divorce is final, keep all your documents in a safe place. Any changes to your plan must reflect these documents, and having them for reference can help you uphold those requirements. For example, your divorce decree may outline specific divisions of property or debt obligations. Having these documents readily available will help prevent potential disputes.

Updating your estate plan can be a complex task during an already stressful time. However, these updates can not only protect your interests but also provide peace of mind.