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How a divorce can impact estate plans

On Behalf of | Sep 5, 2023 | Divorce

Adults who get married and start families often spend time thinking about what will happen to their loved ones if anything happens to them. They may put together an estate plan to provide clarity about their personal wishes and protection for their immediate family members. Sometimes, married couples create estate plans together, and other times each spouse may have their own separate documents addressing their personal responsibilities and resources.

Divorce has a way of influencing almost every aspect of an individual’s life, including these plans. Even matters that people may have assumed they previously addressed may require review and revision in the wake of divorce.

People need to revise their documents

Those who created joint documents will likely need to create entirely new documents and dissolve any trusts they started with their spouse. Those who had their own documents will likely need to modify them. Given that spouses often play a major role in estate planning paperwork, reviewing all of one’s documents to remove a spouse will be an important step for those in the midst of or recovering from a divorce. They will need to remove their spouse as a beneficiary in a will or a trust. They will want to remove them from positions of authority as well.

People generally don’t want a former spouse to serve as their trustee or attorney-in-fact. If there are children and someone hopes to leave an inheritance for them, it may be necessary for them to create a trust even if they hadn’t considered one before to protect resources for their children to access later in life. Someone’s resources will likely also have changed significantly during the divorce. What assets they need to bequeath to others and what debts they need to repay can shift significantly following the division of marital property. Their documents should accurately reflect their current financial circumstances.

On a final note, life insurance is one estate planning detail that people frequently overlook when they divorce. People cannot name a beneficiary for life insurance in a will but instead need to file beneficiary designation paperwork with the insurance provider to update who should receive the payout should anything happen to them. Those who take the appropriate steps to update their estate planning paperwork will reap the benefits in the form of greater peace of mind and better legal protection in the wake of a decision to divorce.