Everyone, regardless of their family dynamics, marital status, or financial means, will benefit from having an estate plan.\u00a0 If you\u2019re already divorced or are in the process of getting divorced, updating your estate plan will be an essential part of your post divorce financial planning.<\/p>\n
An estate plan is comprised of a number of documents, each with a different purpose.\u00a0 These documents are a will, a power of attorney, a health proxy or health directive, and, for some, a living trust.\u00a0 We\u2019ll delve into each of these in a moment.<\/p>\n
Most people think an estate plan is something that you\u2019ll only need when you die.\u00a0 In fact, a good estate plan can also protect you and your assets if you become incapacitated or can\u2019t make decisions for yourself.<\/p>\n
Hopefully, you had a proper estate plan in place during your marriage.\u00a0 Now that your life has changed, you\u2019ll want to review your estate plan as part of your post divorce financial planning<\/a><\/strong><\/span>, to make sure it reflects these changes.<\/p>\n You\u2019ll want to give the attorney that will be creating your new estate plan a copy of your divorce agreement, so that he\/she will know what obligations you have to your ex-spouse if you die.<\/p>\n As you probably already know, a will is a legal document that sets out how your assets will be divided after your death.\u00a0 If you have minor children, it can also appoint guardians for them.<\/p>\n Your will should include the designation of an \u201cexecutor,\u201d who has the responsibility of carrying out the provisions of the will; one or more beneficiaries, who will inherit your assets; instructions for how and when your beneficiaries will receive those assets; and one or more guardians for your minor children.<\/p>\n Your estate planning attorney will execute a new will as part of your post divorce financial planning.\u00a0 Your old will can be revoked by stating in your new will that you\u2019re revoking all prior wills. Because the laws regarding the provisions of a will post-divorce vary from state to state, you should make sure that you have your new estate plan completed promptly after your divorce is finalized.<\/p>\n If the estate plan you had during your marriage included a trust, your estate planning attorney may also recommend establishing a new trust for your post divorce financial planning.<\/p>\n A revocable living trust is sometimes included as part of an estate plan.\u00a0 A revocable living trust is a legal document that can be changed as long as you\u2019re alive.\u00a0 They\u2019re typically used to help you transfer assets to your beneficiaries outside the probate process<\/strong><\/span><\/a>, and to protect your \u2013 and your beneficiaries\u2019 \u2013 privacy.\u00a0 They can also help minimize estate taxes.<\/p>\n You may have created an irrevocable trust before your divorce<\/a><\/strong><\/span>, such as an\u00a0irrevocable life insurance trust (or \u201cILIT\u201d), and named your ex-spouse as a beneficiary of that trust.\u00a0 Because the trust is irrevocable, your ex-spouse\u2019s property rights were determined when assets were transferred to the trust, and can\u2019t be changed. Your new estate plan should specify that a divorce will remove the current spouse as a beneficiary, and that references to \u201cspouse\u201d mean the person to whom you\u2019re currently married, not a specific person.<\/p>\n <\/p>\n A financial power of attorney gives someone the authority to make financial decisions on your behalf, when you\u2019re unable to do so.\u00a0 This power can be very broad, and can include the right to sell your assets and remove money from your bank and investment accounts.\u00a0 In the estate plan you had when you were married, you almost certainly gave your spouse this authority.\u00a0 Now, as part of your post divorce financial planning, you\u2019ll want to select someone you trust to take on this role.<\/p>\n A health directive \u2013 sometimes called an advance directive or health care power of attorney \u2013 allows you to name someone to make health care decisions for you, in the event you\u2019re unable to do so for yourself.\u00a0 In the estate plan you had when you were married, you almost certainly named your spouse to do so.\u00a0 Now, you\u2019ll want to select someone you trust to take on this role.\u00a0 You\u2019ll also want to notify your health care providers of the change.<\/p>\nGive your divorce agreement to your estate planning attorney<\/h2>\n
Your Will and Trust<\/h2>\n
Need guidance\u00a0financially preparing for or navigating a divorce?\u00a0 Contact our team at Springwater Wealth today to learn how\u00a0we can help.<\/strong><\/span><\/a><\/h2>\n
Update Your Power of Attorney<\/h2>\n
Update Your Health Directive<\/h2>\n
Update Your Beneficiary Designations<\/h2>\n