Divorce attorneys saw a wave of divorces last year due to the changes in the tax laws that took effect on January 1, 2019. If you were one of the masses whose divorce was finalized in 2018, now is the time to revise your estate plan. Here are the issues you should discuss with your lawyer:
- Make sure your estate planning attorney has a copy of your Divorce Agreement. Your attorney will need to know what obligations you have to your ex-spouse in the event of your death.
- Update your Health Care Proxy. The health care proxy allows you to name someone to make health care decisions for you if, for instance, you were in a car accident or had a health emergency and were unable to communicate. You may want to name an adult child, a friend, or another relative.
- Update your Power of Attorney. If you had an old power of attorney naming your ex-spouse, that should be revoked. You should also execute a new power of attorney naming a friend, relative or trusted advisor to act as your agent regarding your finances and assets.
- Update your Will and Trust. Remove the provisions for your ex-spouse, and remove your ex-spouse as the executor and trustee. You want to make sure your “Ex” does not receive any assets if you die and has no control over your estate or trust.
- If you have minor children, you want to review who you have named as guardian in the Will. You may choose to name your ex-spouse as the guardian, or you may name someone else. Be aware that your ex-spouse will most likely serve as guardian of your minor children if you pass away unless he or she is determined by the court to be unfit.
- Make sure you have a trust for minor children. If you do not have a trust for minor children, and your ex-spouse is the children’s guardian, he or she will have control of the children’s finances until they turn 18. Most clients do not want their ex-spouse controlling their children’s monies.
- Pay particular attention to life insurance requirements.I have encountered numerous instances where folks just completely ignored their obligations to maintain life insurance under their divorce agreement, or named their new spouse as beneficiary of the policy instead. This could result in litigation. Review your obligation to maintain life insurance under the divorce agreement with your estate planning attorney, and with your divorce attorney, if necessary.
- Check your beneficiary designations. Another area that folks forget about or ignore are their retirement plan beneficiary designations. Make sure your 401K and IRA beneficiary designations are consistent with the terms of your divorce agreement. I have encountered a few situations where folks never updated their beneficiary designations after their divorce, and then died. This can result in unforeseen consequences and litigation to correct who the beneficiary should have been.
- Time for a Prenuptial Agreement. I am always surprised how soon folks get remarried after their divorce is finalized. Needless to say, if you are thinking about getting remarried, make sure you have a prenuptial agreement in place beforehand.
Now is the time to tie up those loose ends from your divorce and get your estate plan in order. Remove your “ex” from those old estate planning documents, take charge and get on with your life!