Estate Planning and Divorce
No one is ever fully prepared for all that’s involved in a divorce. Untangling two lives from one another takes a lot of time and careful consideration. You’ll have to make big decisions about dividing jointly-held property and assets, figuring out where each spouse will live, determining whether alimony will be paid, and agreeing upon child custody and child support. As if this weren’t enough on its own to think about, you also need to consider rewriting your will after a divorce. Questions such as, “Do I need to update my estate plan after a divorce?” and “What will happen to my estate plan/will/trust in a divorce?” need to be addressed. This should be done with the help of an experienced estate planning attorney.
For assistance tackling these questions, contact The Law Office of David G. Bale in Westerville, Ohio. The firm is proud to serve individuals and families in Worthington, New Albany, and throughout Delaware County and Franklin County.
How Divorce Affects Your Estate Plan
Divorce affects nearly all aspects of your life, but one that may have the most far-reaching consequences is how it affects your estate plan. Many couples choose to write out their wills and make estate plans together, and may forget to address this during the turmoil and upheaval of a divorce. Your estate plan lays out your wishes for what happens with your property and assets after you pass away, as well as including directives on who should care for any minor children or who can make financial and medical decisions on your behalf.
Of course, none of us plan on passing away on a certain day—but if something were to happen to you before you had a chance to revise your will or estate plan, it will remain exactly as written. This typically means your now ex-spouse will stand to inherit your estate. If you don’t want this to happen, you need to take action.
Updating Your Estate Plan After a Divorce
Depending on the complexity of your current estate plan, the steps you’ll need to take to successfully update it will vary. For most people, the first task is to address your will since this is the most common estate planning document and the backbone of most plans. You may wish to revoke your will entirely upon your divorce or even right when you’re separated. Keep in mind that if you’ve named your spouse to inherit your assets—or even if you don’t have a will in place at all—and you die before your divorce is finalized, your spouse will be in line to receive everything.
If you choose to simply make revisions to your will, you’ll likely start by changing your executor since many people have this listed as their spouse. You should also look at who you’ve named as the legal guardian of your children and make sure you’re on the same page as your spouse. Lastly, you’ll want to update who you’ve listed as beneficiaries for your assets.
Next, be sure to re-examine the details of your powers of attorney and advance directive documents. Powers of attorney grants an individual legal power to act in your place on financial, legal, and healthcare matters should you become incapacitated or die. If this person is currently your spouse, you may wish to change it. Similarly, your advance directive may also include a provision for who will be allowed to make medical decisions on your behalf.
Lastly, you should review your retirement and life insurance accounts as these were likely set up with your current spouse as your beneficiary. Reach out to an estate planning attorney for help with any of these tasks.
What Happens to a Trust in a Divorce?
A divorce can impact a trust, too. Much depends on what kind of trust you have set up. If you’ve established an irrevocable trust with your spouse listed as a beneficiary, there may be nothing you can do to change the terms of it now. This is typically true regardless of whether the assets were held jointly or individually, since once they’re placed in an irrevocable trust, they are no longer subject to the state’s equitable distribution laws.
If you have a revocable trust (also called a living trust), however, these can be modified. For these, you should work with your estate planning attorney and your trustee to first determine what assets are considered jointly owned (marital property) and which are considered separate property. Any marital property will have to be addressed and divided if necessary before you can adjust your trust. If it’s determined that you held the assets separately, you can either leave them in the trust undisturbed or make any changes you wish to the terms of the trust.
Rely on Trusted Legal Advice
No one should have to go through these legal issues alone. If you’re in the Westerville, Ohio area and would like to consult with an experienced attorney on your concerns about your divorce and estate plan, reach out to The Law Office of David G. Bale to schedule an appointment.