In most cases, divorce can be painful, and emotions can run high. So it’s easy to understand how someone considering or pursuing a divorce can lose sight of crucial things like estate planning. But they’d be doing themselves (and possibly their children) a great disservice if they didn’t do some planning during and after a divorce.
When a couple decides to get married and start a family, in most cases they don’t think about things like divorce and estate planning. They may think about what happens in the event of their untimely demise and may appoint a guardian for their minor children.
But for most, estate planning gets put on the back burner, and in the event of a divorce, not having a current estate plan can cause further confusion and additional emotional pain.
Why Is it So Important to Update My Estate Plan During a Divorce?
Even when you’ve done some estate planning, the plan reflects decisions made as a married couple, which doesn’t serve you when you decide to divorce. In all likelihood, your spouse’s name is on all of the estate documents, making him or her the beneficiary of the estate’s assets. Although upon divorce, the spouse no longer has a legal right to take from the estate, this can cause confusion for many people.
Outdated legal documents should be updated to reflect your current marital status.
I Feel Overwhelmed! Where Do I Start?
Going through a divorce is overwhelming for most people, and it can be hard to know where to start when you already have so many obligations and decisions to make.
Here is a quick checklist to give you an idea of where to start:
Review Your Assets
Start by reviewing your assets. This includes things like:
- Cars
- Homes
- Investments
- Life insurance
- Retirement accounts
How are they titled? It’s probable some or all of these assets are jointly titled. You will likely need a divorce attorney to help you update these titles to reflect the divorce decree.
Review Your Wills & Trusts
Last Will & Testament
Your most recently executed Will determines how your estate will be handled during and after the divorce.
You can draw up a new Will that can amend beneficiaries to children, as opposed to your ex-spouse. Any bequests made to a spouse during marriage are null and void when the divorce is finalized.
Trust and Divorce
You’ll likely need help from an estate attorney to determine how a trust was originally set up because that will determine how difficult it is to change. If you set up an irrevocable trust that names your spouse at that time as a beneficiary, they will likely receive distributions based on the terms of the trust. In other words, an irrevocable trust can’t be modified in the event of a divorce.
Understand How a Divorce Affects Your Power of Attorney
Briefly, a Power of Attorney (POA) authorizes an individual to step in as your representative (attorney-in-fact) in certain situations. Naming a spouse as your attorney-in-fact gives them significant authority over your finances, property, and your personal affairs.
However, if you drew up a Power of Attorney while married, appointing your ex-spouse as your attorney-in-fact, they cannot act in that capacity after divorce.
Understand How a Divorce Affects Your Health Care Power of Attorney
An Indiana Advance Directive, formerly a Healthcare Power of Attorney (HCPA), allows you to appoint an individual to make decisions about your medical care if you are incapacitated. Typically, married couples will elect their spouse to make these decisions. If your Indiana Advance Directive designates your spouse as your healthcare proxy, this appointment becomes invalid once you are legally separated, have received a marriage annulment, or have a petition for dissolution.
Review Bequests to Children & Heirs
Setting up a trust (with an administrator you trust) is a good way to ensure minor children are financially cared for and protected in the event of your death.
Your Last Will & Testament determines whether your former spouse will have access to the trust funds.
If you haven’t created a trust and have minor children, it’s highly recommended that you meet with an estate attorney who can walk you through the best way to ensure your minor children are financially cared for after a divorce.
Review Life Insurance & Retirement Accounts
Most state laws dictate that designated beneficiaries for life insurance policies, pension plans, and retirement accounts (like 401Ks and IRAs) stay in place until a divorce is final.
And because life insurance policies are payable upon your death it’s crucial to review and consider whether to make beneficiary changes and discuss those changes with the insurance company once the divorce is final.
Zentz & Roberts | Estate Planning and Divorce Attorneys
It’s hugely beneficial to meet with an attorney to review and update your estate plan if you are considering or are in the midst of a divorce. At Zentz & Roberts, P.C., family law is our business. We will guide you through the estate planning and divorce process when you are (or will be) divorced. We help provide clarity when things seem overwhelming and help you make the best decisions to protect you and your children. We’d love to hear from you today. Give us a call at 317-220-6056 to get started.
***Please note: This page is not intended to give specific legal advice but is meant for information purposes only. Contact us to discuss your case***