How Does My Divorce Affect My Estate Plans?

Your divorce affects virtually every aspect of your life, including your estate planning. Unfortunately, time and time again, we’ve seen people forget to update their estate plan after a divorce, which can leave assets to ex-spouses or other individuals that may no longer be appropriate. Other less obvious changes to your plan may be necessary as well.

Your Divorce and Your Estate Plan

Some of your estate planning tools, such as retirement funds or life insurance, may be directly affected by your divorce. You and your ex-spouse may reach an agreement that provides for your children after you have passed. For example, you may specifically agree to designate a portion of your retirement funds to the kids.

It is important to update your designations and other documents to reflect the agreements reached as part of the divorce process to avoid conflict or confusion in the future.

Changing Your Will or Trust

While some states will automatically remove any property bequest to an ex-spouse, Florida is not one of those states. You need to affirmatively take action after a divorce to remove an ex-spouse from your Will or Trust. Otherwise, they may still be able to collect.

Once your ex-spouse is removed, you may want to change his or her inheritance to someone else. That may mean making adjustments regarding who gets what among your children or adding a charity to your plan. Either way, you will need make some alterations to adjust to your new family situation.  

Altering Powers of Attorney or Medical Directives

Many married individuals choose to name their spouse with a power of attorney should they become incapacitated. They may also have a medical directive that permits their now-ex-spouse to make medical decisions on their behalf. These documents will all need to be updated to reflect a new individual, assuming you no longer want your ex-spouse to make these types of decisions.

Changing Beneficiary Designations

Although beneficiary designations for retirement plans or life insurance are sometimes overlooked as being part of your estate plan, they should not be forgotten! Changing your Will or other documents will not alter beneficiary designations, so you will need to work with your retirement plan provider or insurance company to change the beneficiary of these accounts.

In Florida, insurance carriers have more leeway in determining who should actually receive funds. If the insurance company determines that you and your beneficiary were no longer married at the time of your death, for example, it has more flexibility in deciding when to pay a secondary beneficiary than in other states.

Nonetheless, you should still take care to revise your beneficiary designations to reflect your family situation. Relying on the insurance company to pay a secondary beneficiary can be risky.

Proper Planning After a Divorce

If you have gone through a divorce, it is a good idea to take a look at your estate plan and make any necessary changes as soon as possible after the divorce is finalized. Contact Legacy Planning Law Group to schedule an appointment. We can work through your plan to determine what kinds of changes you may need to make.

Written by Legacy Planning Law Group

Legacy Planning Law Group is dedicated to working with individuals and families to help protect the assets they have built throughout their life, and make everything simpler for families who have lost a loved one. We help thoughtful people achieve the peace of mind that comes with planning their personal legacy and passing on family harmony.