An estate plan outlines your final wishes in the event of your death, including covering how to divide your assets and provide for your children. Should you get divorced, you will want to update your estate plan to help protect you and your family from undesired consequences.
Why Is an Estate Plan Update So Important? Learn From These Real Life Examples.
In 2001, in the case Egelhoff v. Egelhoff, a father failed to change the beneficiary designations for his pension benefits and life insurance after his divorce. As a result, his ex-wife remained the beneficiary. The Supreme Court ruled that the designations trumped state law, leaving the ex-spouse with the monetary prize and his children with large legal bills.
In 2012, in the case Herring v. Campbell, a father failed to elect someone as his pension beneficiary after his wife passed away. Although the father had six stepsons, the plan administrator decided that they were not his children and instead separated the pension between his siblings. Even after a lengthy court battle, the siblings kept the pension benefits.
Steps to Take to Update Your Estate Plan After a Divorce
As the two cases above show, updating your estate plan is absolutely critical to protect yourself and your family after a divorce. With the help of an experienced estate planning attorney, you can take the proper next steps.
- Change the individual responsible for your health. Most married couples list each other as the party responsible for making health care decisions should an accident occur. After a divorce, it’s important to update your health care proxy if you don’t want your ex-spouse listed any longer.
- Change your will. You’ll likely want to draft a new will to reflect changes to your marital status, along with any other changes you’d like to make. You’ll want to ensure your new will specifically revokes any prior wills and testaments you created in the past.
- Consider your children’s finances. Now is a great time to create a trust for any minor children you have. In the event of your death, your ex-spouse will almost certainly gain automatic control over your children’s finances if you do not have the proper provisions in place.
- Update your power of attorney. You will also want to update your power of attorney by removing your ex-spouse’s name and replacing it with another trusted family member or friend.
Remember to also update any other designations you have in place that exist outside your will, such as those involving your life insurance policies and retirement accounts.
Newly Divorced? Now Is the Time to Protect Your Estate.
If you’re newly divorced, don’t delay updating your estate plan. Now is the time to protect yourself and your family. To make sure your estate plan mirrors your wishes, send us a message.