Once the process of legally ending your marriage begins, you will need to make sure that your own interests are protected and that includes updating your estate plan to reflect this big life change. While some things may remain the same, like leaving your children certain assets, be assured that pretty much everything else will change, according to Forbes’ article, “The First Thing You Must Do When Your Divorce Is Final.”
Once your divorce is final, that is, the divorce decree has been approved by a judge, and a judgment rendered, contact your estate attorney and begin to review and revise the following legal and estate planning documents:
- Powers of Attorney (property, healthcare, HIPAA, etc.)
- Your will
- Life insurance policies
- Retirement accounts
If your ex-spouse is the beneficiary of your life insurance policy and you die—guess what? The proceeds are going to go straight to your ex-spouse and not your children. It doesn’t matter if your estate planning documents stipulate that the proceeds should go to your children. Unless the plan all along was to keep the ex as beneficiary, you’re fine. Otherwise, the kids get zero.
If you don’t even have a valid will in place, the divorce cuts the ex-spouse out as a legal heir, and that person won’t be in line to receive anything from your estate. But they still get the insurance proceeds if you don’t make the beneficiary change.
What is often overlooked is this: when you make changes to estate planning documents, the changes must be in accordance with the terms of your divorce decree. The divorce judgment is legally binding, and if as a part of your divorce, you agreed that your ex-spouse would remain the beneficiary of a life insurance policy, you can’t go ahead and change the beneficiary designation on the policy.
If these documents are not in agreement, the divorce judgment will override any decisions you made in your will. Your estate planning attorney will need to review your divorce decree while preparing new documents for your new life.
Reference: Forbes (August 14, 2016) “The First Thing You Must Do When Your Divorce Is Final”