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How Do I Update My Estate Plan After a Divorce?

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By Fate Kersey
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How do I update my estate plan after a divorce

Divorce is a difficult and emotional time for anyone, but it is important to ensure your assets are protected from legal disputes between you and your former spouse.

One way to do this is by updating your estate plan. This will ensure your wishes are carried out when you pass away or become incapacitated.

Life Insurance

Divorce can be stressful, and it can also bring up a number of estate planning concerns. Fortunately, updating your estate plan after a divorce is not as difficult as it might seem.

One of the simplest and most important parts of your estate plan to update after a divorce is your life insurance policy. Many people choose their spouse as the beneficiary of their life insurance, but if you’re getting divorced, consider changing your beneficiaries to reflect your new situation.

In addition, some divorce settlements require you to purchase a life insurance policy in order to protect child support and alimony payments. This is especially true if you have children from your former partner who are dependent on the income you receive from those payments.

Will

Many people who are going through a divorce find themselves in a position where they need to update their estate plan. These changes may include updating your will, power of attorney, and trusts.

Whether you do this yourself, or hire an attorney, it is important to make sure that your wishes are clearly documented and carried out.

For example, it is essential to update your life insurance beneficiaries and other beneficiary arrangements such as retirement accounts, transfer-on-death brokerage accounts, and payable-on-death bank accounts.

This is especially true if you have minor children. Failing to update these documents after a divorce can leave your former spouse with access to assets you would have intended to pass on to your children.

Trust

Divorce is a complicated process that can bring many changes to your life, and you should update your estate plan accordingly. Updating your trust after a divorce is especially important because it will prevent your ex-spouse from inheriting your assets or becoming in charge of your health care decisions if you become incapacitated.

It’s also a good idea to change your beneficiary designation on any bank accounts, investment accounts or insurance policies that you have. This is especially true if you have minor children that need a guardian.

Power of Attorney

After a divorce, it is important to update your power of attorney, advance directives and health care documents. These documents can be particularly critical if you have appointed your spouse as your agent for financial or medical decisions.

Unless you revoke the document, your spouse could have authority to sell your property and remove funds from your bank accounts or other financial assets. This would likely not be in your best interests, especially if you are divorcing.

Most estate planning attorneys recommend that you revoke the power of attorney and create a new one. You can also create a durable power of attorney with specific language that states your intention to keep your agent’s powers in the event you become incapacitated.

Advance Directive

Divorce is often a difficult time in life. A lot of things change in a divorce — family structure, priorities, values and goals.

Estate planning documents such as a will, trust, living will, powers of attorney, and advance directives need to be updated in response to these changes. It’s a good idea to update your documents as soon as you can after a divorce is finalized so that your plans will reflect your new lifestyle and priorities.

In many states, a competent adult or emancipated minor can set up an advance directive. Form requirements vary, but typically you must sign and date it in the presence of two witnesses.

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