Effects of Divorce on Estate Plans

Divorce is a prevalent feature of today’s society—approximately half of marriages in the United States end in divorce. It impacts every aspect of your life, from the emotional and familial to the financial. While coping with the aftermath of divorce can be difficult, it’s crucial to create a plan for life after divorce. Part of this plan includes creating or revising your estate plan. Whether you’ve already gone through a divorce or are just beginning the separation process, it’s important to review and revise your estate plan as soon as possible.

Many couples establish a joint estate plan during marriage, especially if they have children. Protecting one’s children in the event of death or incapacity is often the primary reason for creating such a plan. Typically, the estate plan names the other spouse as the main beneficiary and the agent to make decisions in case of incapacity. However, after separation, both individuals may want to change their beneficiaries and the people who will make decisions for them in case of incapacity. You may need to revoke or amend your existing documents, especially if they include bequests that are no longer desired. If you have children, you might need to create a trust to designate a trustee of your choice, isolating the assets from your former spouse’s control.

Additionally, be aware that, even if you don’t want to make changes to your estate plan, California probate law automatically revokes or amends certain provisions of your will and trust upon divorce (by operation of law). This makes it essential to consult with an attorney to ensure your estate plan aligns with your wishes moving forward.

Revising your estate plan also gives you the opportunity to select a new person to make medical decisions for you if you become incapacitated. While it’s common to name your spouse as your agent for healthcare decisions, you may now want someone other than your ex-spouse to take on this responsibility.

Regardless of whether your divorce is high-conflict or mediated, it’s crucial to determine how the separation or divorce affects your existing estate plan. In many cases, you may want to hire a different attorney than the one who drafted the joint estate plan to handle your individual estate planning, as the original attorney should not represent both parties after separation.

If you’re divorced and never created an estate plan, now is the time to start. An estate plan helps you put your affairs in order, protect you and your loved ones from the unexpected, and avoid the costly and lengthy probate process—the court-supervised procedure to transfer assets to your beneficiaries.

While reviewing and revising your estate plan, don’t forget to update your beneficiary designations for life insurance, annuities, retirement plans, and IRAs. If there’s a discrepancy between your beneficiary designations and your estate plan, the beneficiary designations will prevail, meaning funds could go to a different person than the one you intended.

Once you’ve reviewed and revised your estate plan, it’s important to transfer the legal title and property interests to your individual revocable living trust. Make sure that your real estate and other assets are properly titled and reflect that they are part of your individual trust.

Additionally, you may want to ask your relatives (usually parents or grandparents) to review their estate plans, as their documents might include gifts to your ex-spouse or create trusts for your children with your ex-spouse named as the trustee. Your relatives may need to update these provisions immediately.

There are many essential steps to take when rebuilding your life after a divorce, and creating or revising your estate plan is one of them. Learn more about the services we offer or contact us today for a free consultation!

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What is a Revocable Living Trust?

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Estate Planning and Tax Benefits for Same-Sex Couples: What You Need to Know