Guilford County estate planning attorneys know, a divorce changes everything. If you are in the process of divorce or just finishing up, you are most likely busy trying to readjust to your new life. Although it’s a hectic time, it is important that you do not forget that you need to update your estate plan. Here is a checklist to get you started:
- Update Your Living Trust and Will
These documents contain instructions about a number of crucial estate planning decisions such as who is in charge of administering your estate, who is nominated as guardian of your minor children, who are the beneficiaries of your estate, and who is in charge of managing assets on behalf of the beneficiaries if they are minors. The last thing a newly divorced individual wants is to have their ex-spouse be in charge of handling their assets should they become incapacitated or pass away. After a divorce, joint Trusts need to be dissolved with each individual creating their own with the appropriate updated instructions.
- Update Durable Power of Attorney for Finances and Advance Healthcare Directive
These critical estate planning documents allow for the appointment of an agent to act on your behalf to make crucial financial and medical decisions in case of your incapacity. Again, the last thing a recently divorced individual wants is to have their ex-spouse in charge of their finances and medical decisions. New Powers of Attorney should be executed post-divorce.
- Update Beneficiary Designations
Beneficiary designations are essentially contracts between a financial institution/administrator and the person who owns the account. These are extremely important because, for estate planning purposes, they generally trump any outside instructions. Therefore, even if a Trust/Will document has been updated post-divorce, those instructions will not control an asset with a beneficiary designation attached to it unless the Trust is named as a beneficiary. Individuals often forget to update all of their beneficiary designations post-divorce. In fact, most people rarely, if ever, update them, and this can cause a nightmare when that individual passes away.
- Review Titling of all Major Assets
A title dictates to whom and how an asset is transferred at death and who has control over it during their lifetime. The most common mistake made in estate planning is simply listing an asset in a Trust document. Proper and formal titling of all of the major assets is imperative. Post-divorce, it is essential that all titles be reviewed.