You already know, all-too-well, the havoc that divorce can cause in your life. Beyond the emotional turmoil, you may spend months splitting up assets, negotiating support, and much more. Who wants to hear that they need to schedule another meeting with an attorney to address your estate plan?! But here are some reasons why this is essential. You must protect yourself, your loved ones, and your assets. So, as part of starting your new life, take care of your will and other legal planning. Even if you don’t feel like it, you can do it, and we’re here to help.
If you’ve never set up an estate plan, now is the perfect time to make these decisions, so the state doesn’t decide on your behalf. You can plan for decisions that affect you in life and after death. The following list describes five things to do:
1. CHANGE YOUR BENEFICIARIES
Most couples designate spouses as your beneficiaries and often trustees or executors. Divorce does not automatically invalidate these designations, so they are still enforceable under the law. Even though you are now divorced, you may want an ex to inherit still, be the trustee, etc., but you should knowingly make those decisions.
Real-Life Example: A recently divorced woman wanted to leave her life insurance to her daughter, not her ex-husband. Sadly, her daughter died, but she hadn’t updated her $500,000 life insurance beneficiary from her ex-husband before her death. Even though her Texas divorce decree said she was supposed to keep her life insurance, the insurance company wouldn’t honor the decree because it was employment-based life insurance under a federal law called ERISA. The money was her exes due to her simple oversight.
2. UPDATE YOUR ESTATE PLAN
If you no longer want your ex to be the executor of your will, make sure that you remove them from any legal decision-making authority. You can also decide whether to leave your ex anything when you pass away. If you have a trust, figure out if you want your ex to manage it after you’re deceased.
Also, consider what to do with gifts that no longer exist after your divorce. What if you previously decided to leave your house to your daughter and a stock portfolio to your son? If you sold the house without a revised estate plan during the divorce, your daughter would inherit nothing. Additionally, suppose you had a joint estate plan previously prepared with your ex-spouse. In that case, you may have chosen to give gifts to extended family, charitable entities, or others that you may no longer want to receive one red cent. Update your wishes with your current priorities.
Unless you want your ex-spouse to make decisions for you, change your medical and financial power of attorneys to someone else. Powers of attorney enable an authorized person to make healthcare decisions or handle your financial affairs. With this authorization, an authorized person can act on your behalf if you cannot do so.
3. SELECT A GUARDIAN FOR YOUR CHILD
If you have minor children, determine if a new guardian is needed. In Texas, a guardianship designation expresses your wishes for the care of your child in the event of your incapacitation or death. Without legal documents, a biological parent will take sole custody of a child—rather than a grandparent or a stepparent. While this may be perfectly fine (depending on your situation), you may not want your ex to manage any assets you leave for your child. You can establish a new trust to provide management for your children’s inheritance. Additionally, if you have a child and a court determines your ex is unfit, listing an alternative guardian ensures that your child is protected.
4. SELECT A GUARDIAN FOR YOURSELF
Similar to selecting a guardian for your child, decide who to name as a guardian for yourself. A guardian is an adult of your choosing who is responsible for the legal care and control over your physical person in the event of your incapacitation; this person can also manage decisions that affect your finances as well.
5. REVIEW YOUR FINANCES AND TAXES
Because divorce can severely affect your finances and taxes, estate planning may be essential for structuring post-divorce holdings. Estate planning (such as creating or revising an existing trust) may help reduce the new tax liability you face. You know the emotional energy required for wrapping up a divorce. Unfortunately, many people won’t take these next steps because a disconnect exists when contemplating what else to do after a monumental life change. Our experienced estate planning attorneys want to take over the process you left off so a trusted professional can close that gap with the intentionality you invested into securing your divorce.
At Ibekwe Law, PLLC, we can help with all aspects of estate planning after your divorce, and we are here to answer questions, address concerns, to help you achieve your goals. Contact us today.