Creating a comprehensive estate plan is one of the most meaningful gifts you can give to both your loved ones and yourself over the course of your lifetime. Don’t make the mistake of stopping there though. Once that plan is in place, it needs to be reviewed and updated on a routine basis. It may also need to be updated when certain events call for a revision. For example, a Riverside estate planning lawyer explains the importance of updating your estate plan following a divorce.
Routine Reviews and Revisions of Your Estate Plan
One of the most common estate planning mistakes people make is forgetting about their plan once an initial plan is in place. Sometimes, failing to update your estate plan can be more detrimental to the disposition of your estate after your death than not creating a plan in the first place. Both can dramatically increase the likelihood of litigation during the probate of your estate; however, an outdated plan can also result in valuable estate assets ending up in the hands of unintended beneficiaries. Failing to update your plan after a divorce is a perfect example of how this can happen. Be sure you take the time to update your estate plan every three to five years during your working years and every five to ten years after you reach retirement age as a matter of routine. In addition, life events such as a divorce call for a more immediate review and revision of your estate plan.
Why It Is Crucial to Update Your Estate Plan after a Divorce
If you are married, the odds are good that your estate plan reflects that fact. For example, your spouse is likely the beneficiary of many assets and you probably hold some assets jointly. Some married couples have estate plans that are even more intertwined. You may also have appointed your spouse to important fiduciary and/or decision-making positions within your estate plan. All of that makes sense while you are married, particularly if you have children together; however, if you decide to end the marriage you should update your estate plan to reflect the change in your status as soon as possible after the divorce is final. Always consult with your estate planning attorney before actually making any changes to your estate plan that are the result of a divorce because the divorce laws in your state may require you to wait until the divorce is final before making any changes to the beneficiary designation or changes in how property is titled. Making changes while the divorce is pending could cause problems with your divorce.
What Happens If I Fail to Update My Estate Plan after My Divorce?
The reasons why you need to update your plan after a divorce are fairly obvious. Once divorced, you probably don’t want your now ex-spouse to be the beneficiary of your life insurance policy (unless it is as the Trustee for your minor children) nor do you want him or her to inherit your estate assets. Worst still, imagine failing to update an advance health care directive that appoints your spouse as your Agent for making health care decisions for you in the event you incapacity prevents you from making them yourself? While the reasons to update your plan are clear, the problem is that people are often still dealing with the emotional fallout from a divorce and they don’t stop to think about the practical ramifications of the divorce.
What Needs to Be Updated?
Because every estate plan is unique, you should sit down with your estate planning attorney to discuss exactly what you need to change if you are going through a divorce; however, some common changes that follow a divorce include:
- Appointing a new Executor in your Will
- Remove your ex-spouse as a beneficiary of your Will
- Removing your ex-spouse as the Trustee of your revocable trust
- Removing your ex-spouse as beneficiary of your trust
- Changing the beneficiary on life insurance policies
- Removing your ex-spouse as beneficiary of your retirement plan
- Terminating the power of attorney naming your ex-spouse as Agent
- Changing your Agent under your advanced health care directive
- Removing the POD or TOD designation on financial or investment accounts
Contact a Riverside Estate Planning Lawyer
If you have additional questions or concerns regarding the need to update your estate plan following a divorce, contact the experienced Riverside estate planning attorneys at Sandoval Legacy Group, A Professional Law Corporation by calling (951) 888-1460 to schedule an appointment. We are very familiar with tax law as it pertains to divorce as well as planning for divorcing couples as well as planning for blended families should you decide to get remarried in the future.
Have a question? Ask Dennis.
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