3 Things you Need to Know About Estate Planning After Divorce
Most recently divorced people think their ex-spouse is the last person they want to inherit their assets when they die. Additionally, they do not want that person to make life and death decisions for them. But that is exactly what can happen, and often does, when estate planning documents are not updated.
Assets with beneficiaries are a great place to begin. Update the beneficiaries on your retirement plans, life insurance policies, investment accounts, and IRAs, among other documents. These items are not controlled by a will or trust and will be paid out directly to the beneficiary.
It is critical that you name the right beneficiary. Possible income tax and estate issues come into play here so speak with an attorney before updating your beneficiaries in an effort to minimize the financial liability for your beneficiary.
Powers of Attorney
Most likely, you named your ex-spouse as agent in your power of attorney (POA) document. This usually gives the agent broad powers, including being able to sell and buy real estate, change beneficiary designations and open/close financial accounts. Consider naming a parent, adult child or sibling as he agent on your power of attorney.
Wills and Trusts
Your ex-spouse may inherit your assets if you do not update your will and trust. If you have children together, as they are minors when you pass away, the other parent usually gets sole custody. But, if your ex passes away before you, or, your ex had his parental rights terminated, the court would have to appoint a guardian for your minor children and the judge would want to know your choice. So, name a guardian in your will regardless of the age of your minor children.
These are only a few of the many documents that should be updated after your divorce is final. Consider meeting with an attorney to help you think through all of the possible scenarios that could happen to your assets and your family should you pass away unexpectedly.
Don’t procrastinate on this, as you may forget to update your estate plan at all, which can be disastrous for the loved ones that you leave behind.