If you decide to divorce, it’s important to not overlook updating your estate plan. Consider this scenario: You suddenly die and your ex-spouse inherits everything then when he dies his new wife inherits what’s left. Or what if you survive a car accident but are hooked up to a life support system? Who do want making the decision on if or when to pull the plug? Your ex-spouse? Probably not. For these reasons, you really want to update your estate plan when going through a divorce.
Your estate plan contains many individual policies, retirement plans, investment accounts, bank accounts, annuities, life insurance policies, and more. If you suddenly pass away and your ex-spouse is still named as the beneficiary of these accounts and policies, they will inherit them. When you are going through a divorce, you need to replace your ex-spouse’s name with a new beneficiary. At the same time, do not rush to choose a beneficiary. Take some time to think about who you should name as beneficiary, someone who will always have your best interests in mind rather than their own.
If you decide to name one or more minor children as beneficiary and they are still minors when you die, the law requires they have a guardian until they reach the age of eighteen. They can not receive their inheritance until they reach this age. That means your ex-spouse could legally be court approved to manage the funds and assets left behind. To avoid this, it is recommended to name a trust as the beneficiary. This person could be a parent, a sibling, or other trusted family member. By naming a trust, your ex-spouse will have no legal control over your children’s inheritance. In your estate plan, you need to name a guardian to care for them, especially if you think your spouse is an unfit parent. If you were to die, who would you want to raise your children? If not your ex-spouse then consider a close family member or friend, like a parent, sibling, or cousin.
Powers of Attorney
A power of attorney grants someone else the “power” to make decisions for you if you are unable to do so because of health issues. Married couples are typically named power of attorney for each other. Because this gives one spouse the ability to make life and death decisions for the other, it is important to change your ex-spouse’s name and replace it with someone else who you trust. A power of attorney also means that the person can make financial decisions for you. This means the power of attorney can close a bank account, sell a home, sell stocks and more. When you are going through a divorce, it is best to name a trusted family member or friend to have power of attorney.
Always remember that estate planning is a continuing process. Better discuss such matters with your attorney to see to it that all the documents are updated and still in accordance with your wishes. For your estate plan needs, contact Dana Law Group today.