Revising Your Estate Plan After Divorce

Divorce affects not only your personal and financial life but also how your assets will be managed and distributed after death. Many people overlook the need to update estate planning documents following a divorce, which can lead to unintended outcomes, such as a former spouse inheriting assets or retaining control over important financial and medical decisions. Taking the time to revise your estate plan ensures that your wishes are respected and your assets are protected.

Why Updating Your Estate Plan After Divorce is Important

Divorce significantly changes your personal and financial circumstances. If your estate plan remains unchanged, your former spouse may still be listed as a beneficiary or decision-maker. Without proper revisions, this could result in an ex-spouse inheriting assets, managing finances, or making medical decisions on your behalf in case of incapacity.

Key documents that should be updated include wills, trusts, powers of attorney, and beneficiary designations on life insurance and retirement accounts. Ensuring that these reflect your new situation helps avoid complications and ensures that your assets go to the right individuals.

Updating Wills and Trusts

A divorce does not automatically remove an ex-spouse from your will or trust. If your former spouse is still named as a beneficiary or executor, they may retain authority over your estate or inherit assets, even if this is no longer your intention.

• Review Your Will:
  • Remove or replace your former spouse as a beneficiary.
  • Name a new executor or personal representative to handle your estate.
• Update Trusts:
  • Amend or revoke any revocable trusts that name your former spouse as a trustee or beneficiary.
  • Establish new terms for how assets should be distributed.

State laws vary on how divorce affects estate plans. Some states automatically revoke spousal provisions after divorce, while others require you to update the documents directly.

Reviewing Beneficiary Designations

Assets such as life insurance policies and retirement accounts typically pass directly to named beneficiaries, regardless of what your will or trust states. Failing to update these designations could allow your former spouse to inherit assets unintentionally.

• Accounts to Update:
  • Life insurance policies
  • Retirement accounts (e.g., 401(k), IRA)
  • Payable-on-death (POD) and transfer-on-death (TOD) accounts
  • Jointly held assets with rights of survivorship

Ensuring that these assets are correctly assigned helps prevent future legal disputes and ensures that your assets go to the right beneficiaries.

Changing Powers of Attorney and Healthcare Directives

If your former spouse is listed as your power of attorney or healthcare proxy, they may retain control over your financial and medical decisions unless you make changes.

• Financial Power of Attorney:
  • Name a trusted individual to handle your financial matters.
  • Ensure that the new agent is aware of your financial situation and responsibilities.
• Healthcare Directives:
  • Appoint a new healthcare proxy to make medical decisions if you become incapacitated.
  • Update your living will to reflect your current preferences for medical care.

Revising these documents ensures that your decisions are made by someone you trust.

Key Considerations

• Wills and trusts must be updated: Failing to revise these documents could result in your ex-spouse inheriting assets or serving as executor.
• Beneficiary designations take precedence over a will: Retirement accounts and life insurance policies must reflect your current wishes.
• Powers of attorney and healthcare directives should be revised: Naming a new agent ensures that financial and medical decisions align with your intentions.
• State laws vary: Some states automatically void spousal provisions upon divorce, while others require direct updates.
• Timely updates prevent complications: Addressing these changes promptly helps avoid legal disputes and ensures your assets are distributed according to your wishes.

Protect Your Assets After Divorce

Divorce has a lasting impact on your estate plan, making it essential to update key documents to reflect your new circumstances. At The Werner Law Firm, our experienced estate planning attorneys will help you revise your will, trusts, beneficiary designations, and powers of attorney to ensure your assets and decisions are handled according to your current wishes.

If you have any questions, schedule a free appointment with us through our online appointment page.

You can also read reviews from some of the hundreds of clients we have helped over the years.

References: Investopedia (June 25, 2024) “Rewriting Your Will After Divorce” and Justia (September 2024) “Estate Planning After Divorce”