No one wants to go into a marriage planning for divorce. You might think it’s bad luck or shows a lack of confidence in your relationship. It’s particularly hard if only one of you wants to be cautious about financial and legal documents in case the marriage doesn’t last. Pre-nuptial agreements are an example of entering a marriage with caution, and many people think divorce-minded Estate Planning is another example. However, once children are involved, it’s a good idea to think about what would happen if your Estate Plan is executed as written after you and your spouse are divorced.
Granted, one of the first things you should do after a divorce is finalized is revise your Estate Plan. That means each spouse should write a brand-new Will and divide Trusts according to the asset division determined by the divorce agreement. However, in case this doesn’t happen fast enough, there are ways to set up an Estate Plan that will help protect your wishes for your children, even in the case of divorce.
Revocable Living Trusts Are Important Estate Planning Tools
If you don’t already have the bulk of your most valuable assets in a Revocable Living Trust with your children named as beneficiaries, that is something you should do as soon as possible. Most Trusts are set up so that the couple has control of all of the assets in the Trust while they are alive, and beneficiaries inherit the assets according to the instructions outlined in the Trust documents. This avoids the necessity of probating those assets, which can open them up to claims by other people, such as second spouses and children from another relationship.
What to Change in Your Estate Plan After a Divorce
You might think you have plenty of time to deal with your Estate Plan after a divorce, but—trust us—the longer you wait, the more you put at risk. If you or your spouse dies between finalizing the divorce and updating your Estate Plan, you could run into problems. As soon as possible after your divorce is finalized, we recommend that you revise the following:
- Your Will. You probably have a joint Will with your spouse, so you will need to execute a new Will just for yourself. Your Estate Planning lawyer can make sure the Will cancels out previous Wills, removes your spouse as an heir, and accomplishes your other goals.
- Trust documents. If you had a Trust jointly with your spouse, those assets were probably divided in the divorce, so you will need a new Trust in your name so you can continue to protect assets for your beneficiaries.
- Beneficiary designations. Any retirement accounts or life insurance policies that have your ex listed as the beneficiary need to be updated. You might name your children, or you could name a friend or your Trust instead.
- Guardianship. If you die with minor children after you are divorced, your ex will most likely get full custody. If this is against your wishes, as reflected in your current parenting plan, you will need to select guardians carefully and ensure that your choice is legally enforceable.
This might seem like a lot to deal with after just going through a divorce, but the bottom line is simply to schedule a meeting with an Estate Planning lawyer, and we will take care of the rest!
What if Your Child Gets Divorced?
While we are on the topic of divorce, another important consideration when writing an Estate Plan is protecting the assets you want your children to inherit from their future ex-spouse if they end up getting divorced. In other words, if you die and leave money to a child who ends up getting divorced later, will their ex get half of that money in the divorce? You probably don’t want that to happen. Depending on the laws of the state in which the child gets divorced, an inheritance might be excluded from marital property and not subject to division. However, the best way to ensure that your child keeps the whole of their inheritance is to protect it in a Trust that is specifically designed for that purpose.
