How Divorce Can Affect Your Estate Plan
It's hard to imagine two subjects that could be more depressing than death and divorce. Unfortunately, both situations often become a reality for many people. Estate planning plays a critical role in determining the distribution of your assets after you pass away, and your divorce could have a significant impact on the estate planning process.
Here are three things that you will need to adjust if you have already completed the estate planning process and you are going through a divorce.
1. Beneficiaries
One of the most important things that occurs during the estate planning process is the naming of beneficiaries. Beneficiaries receive financial assets and real property after your passing, and it is common for many people to name their spouse as a beneficiary during the estate planning process.
Once you or your spouse files for divorce, you may wish to name someone else to receive your property in the event of your death. Be sure that you talk to your attorney about updating your beneficiaries if you no longer wish to include your former spouse.
2. Assets
Going through a divorce often means the division of marital assets. If you will be losing sole ownership of a home, vehicle, bank account, or retirement assets as a result of divorce, it's important to recognize how the loss of these assets can affect your estate plan. You will need to work with your attorney to generate a new will that includes a current list of your post-divorce assets.
Ensuring that your will is updated at the time of divorce will help prevent any possible disputes that could arise over assets left to beneficiaries in your original will that you no longer have the legal right to bequeath.
3. Disclosure
When going through a divorce, it's essential that you disclose all of your assets to your attorney. The failure to include an asset in your divorce documents could jeopardize your testamentary intent for that asset once you pass away.
Working closely with your attorney to identify all assets that need to be included in both your legal documentation and your estate planning documentation as you go through a divorce will minimize any problems your surviving beneficiaries have in claiming ownership of property after your passing.
Going through a divorce can be challenging, but you need to thoroughly address your legal needs at the time of divorce to protect yourself (and your assets) in the future. Talk to your attorney about the effect your divorce will have on your estate planning documents, and update these documents immediately to prevent problems in the future.