Growth is a mandatory part of life. As you age, your life expands and changes. Often these changes come slowly, but sometimes tectonic shifts happen—and it is at these times that your estate plan needs an update. Divorce is an example of one such tectonic shift. When ending a marriage, it is crucial that you work with an estate planning attorney to update the following documents.
Four Documents to Update in a Divorce
1. Last Will and Testament
When you were married, you likely wrote your spouse into your Last Will and Testament. Now, as your union ends, you need to rethink those decisions. In most states, upon divorce, any provision in the Will for the benefit of your former spouse becomes ineffective. This does not mean your Will has been revoked, however. If you do not attend to making updates, your ex-spouse may be excluded from your estate, but designations naming their children or relatives will still stand. What is more, until your divorce is finalized, your current Last Will and Testament remains in vigor, so if you see a split coming, it is urgent that you make updates immediately.
2. Revocable Living Trust
Many people rely on a revocable living trust to save their loved ones the hassle of navigating probate court. Whether your ex-spouse is co-trustor, or simply named as a beneficiary of your trust, now is the time to examine your trust agreement.
A revocable living trust can be revoked or amended at any time, but this does not mean you are free to do as you wish with the funds contained therein. The value of your trust could determine how much you pay in alimony and child support, and it may be that the settlement agreement drafted in your divorce entitles your ex-spouse to a portion of the value, regardless of how the trust was owned. For all of these reasons, it is important to consult an experienced estate planning attorney when working out what to do with a revocable living trust during a divorce.
3. Power of Attorney
Estate planning law in most states revokes a named spouse’s power of attorney as soon as an action for divorce is filed. However, until this formal step is taken, your spouse retains the ability to act as your agent in financial and related matters. Often, members of a couple anticipate a split long before formal action is taken and prepare their finances accordingly. To avoid untoward surprises, it is wise to update your power of attorney designations as soon as divorce seems imminent.
4. Advance Directives
Not all states revoke a spouse’s designation as an agent under your medical directive when an action for divorce is filed or a final divorce decree is granted. This means that if you don’t take active steps to rectify such designations, your ex-spouse may maintain the authority to make medical decisions on your behalf should you suffer incapacitating injury. Once again, this is why it is crucial to speak to an estate planning attorney when preparing for a divorce.
5. Beneficiary Designations
Many assets, such as life insurance policies and retirement accounts, often list a beneficiary to receive those assets at death, passing outside of your Will or Trust. Oftentimes these assets are your most valuable and chances are you have named your spouse as the primary beneficiary. Many states revoke such spouse’s beneficiary designation upon divorce, however, if the company administering such account is unaware of the divorce, it just might get paid out anyway. To prevent an accidental payout of these assets to a soon to be ex-spouse, we recommend designating a new beneficiary when contemplating divorce or separation.
To learn more about updating your estate plan in times of divorce, or any other moment of major life change, do not hesitate to contact the dedicated team at Caress Law either by calling (503) 292-8990 or using the contact form on our website.