Revising Your Estate Plan After Divorce

We’ve all read the statistics: nearly half of all marriages in the U.S. end in divorce, and close to 65 percent of second marriages don’t last. There is a lot to consider when you are going through a divorce, especially if you have young children and own multiple properties. Thinking about the Estate Plan you and your ex created years ago might not be at the top of your list, but we encourage you to review and revise it with the help of an Estate Planning attorney as soon as possible.

Life is unpredictable—you probably never expected to get divorced—so it’s always better to be proactive than to bury your head in the sand and hope for the best. If you don’t want your ex to make medical decisions for you or to inherit the assets you got in the divorce, revising your Estate Plan should be at the top of your to-do list.

What Could Happen If You Don’t Revise Your Plan

Revising an Estate Plan after a divorce is crucial to avoid unintended outcomes, prevent potential legal disputes, and ensure that your assets and interests align with your post-divorce circumstances and wishes. The longer you sit on an old Estate Plan, the more likely it is that you will face the following challenges:

• Loss of privacy and control. Failure to update Estate Plans can lead to an ex-spouse having access to sensitive financial and personal information, which can raise privacy and control concerns.
• Conflict and legal challenges. Inconsistent or outdated Estate Plans can result in disputes and legal challenges among family members, causing emotional stress, financial costs, and potential damage to family relationships.
• Tax implications. Changes in marital status can have significant tax implications for Estate Planning. Failing to adapt the plan can result in unnecessary tax burdens or missed opportunities for tax savings.
• Complex financial arrangements. Divorces can involve complex financial settlements, including spousal support (alimony) or child support agreements. These financial arrangements need to align with the Estate Plan and ensure continued support for dependents.
• Long-term care and retirement. After a divorce, financial goals and retirement plans may differ significantly from those made during marriage. Estate Plans should be adjusted to reflect these changes to secure one's financial future.
• New relationships. If either party enters into a new relationship, it can further complicate matters. Updating the Estate Plan is essential to ensure that new partners, children, or step-children are appropriately provided for or excluded as desired.
• Anxiety and worry. Revising an Estate Plan after a divorce provides peace of mind, knowing that your assets will be distributed as intended and that your wishes regarding medical care and guardianship will be respected.

Consulting with an experienced estate planning attorney is advisable to navigate these changes effectively and comprehensively. An attorney can also help you design an Estate Plan that will protect your interests if you remarry and divorce again.

Aspects of an Estate Plan That Need to Be Revised After Divorce

Divorce can have profound implications on a joint Estate Plan, which typically involves various legal documents and arrangements designed to manage assets and distribute them upon the death of one or both spouses. During a divorce settlement, several critical aspects of the joint estate plan need to be carefully considered and revised to reflect the changed circumstances.

Here are the key aspects to address:

• Revoking or amending existing Wills. Spouses often share a Will or leave assets to each other in their separate Wills. In a divorce, these provisions may need to be revoked or changed to designate new beneficiaries.
• Trusts. Similar to Wills, Trusts may need to be amended to remove or adjust the former spouse's role or benefits. Each party may wish to execute an entirely new Trust following a divorce.
• Beneficiary designations. You will have to update beneficiary designations on life insurance policies to ensure that the proceeds go to the intended beneficiaries rather than the ex-spouse. You will also have to review and change beneficiary designations on retirement accounts (e.g., 401(k), IRA) to avoid unintended distributions.
• Powers of Attorney. It is likely that you will want to revoke any financial powers of attorney granted to the ex-spouse and consider appointing a new agent to manage financial matters if needed. Similarly, you will want to update health care powers of attorney to designate a new health care proxy if necessary.
• Guardianship and custody provisions. If there are minor children, the Estate Plan should address guardianship arrangements and custody provisions. The custodial parent might name the other parent as the guardian, but decisions about who will care for the children in the event of the death of both parents may need to be adjusted.
• Property ownership and division. Reevaluate property ownership and the division of assets. This may involve selling jointly owned property, transferring ownership, or liquidating assets as specified in the divorce settlement agreement.
• Debts and liabilities. Address how joint debts and liabilities will be managed and allocated after the divorce. Ensure that any obligations are outlined clearly in the divorce settlement.
• Trustees and executors. If one spouse served as the trustee or executor of the other's estate, you will want to consider appointing new individuals or professionals for these roles.
• Review and revise. Consult with an Estate Planning attorney to review the entire Estate Plan and make necessary revisions to align with the new post-divorce circumstances and ensure legal compliance.
• Communication. Keep lines of communication open with your ex-spouse, especially if you have children. It's important to ensure that everyone involved is aware of the changes and their respective roles and responsibilities.
• Regular review. Continue to review and update your estate plan as needed, especially if there are significant life changes, such as remarriage or the birth of additional children.

Navigating the complexities of estate planning during and after a divorce requires careful consideration and the guidance of a qualified attorney. Addressing these aspects will help ensure that your estate plan reflects your new financial and personal circumstances while protecting your assets and loved ones as intended.