The Guide to Estate Planning for Divorcees

estate planning for divorcees

If you are going through a divorce or are recently divorced, you might feel a little done with legal issues, but think twice before you consider everything handled. One aspect of divorce that your family law attorney will generally not address with you is making any necessary changes to your estate planning documents. Perhaps some issues connected to estate planning will be covered in your divorce decree or prenuptial agreement but others will still need to be handled.

Think through any accounts that have been put in both names, see what needs to be separated or divided, write a new will, revoke an old trust, etc., but make sure that you get your accounts in order sooner rather than later—divorces sometimes drag on for years, and chances are you do not want your ex inheriting your property or making medical decisions for you.

Estate Planning for Divorcees

Will

First things first. If you have a last will and testament that leaves your assets and property to your ex-spouse, you’d best get that changed. You can revoke your old will by destroying any copies of it, and then executing a new will removing your ex as an heir. (Start your freelegal will with Tomorrow.)

If you do not yet have a will, now would be a good time to get some kind of estate plan in place, especially if you have children. It is even more important if your children are minor, so you can name a guardian to take care of your minor children if something happens to you. You may also want to name an alternate guardian for your children, in case your ex is no longer alive or is determined to be an unfit parent. Designating a guardian is not binding, but it lets the court know what your wishes are if they need to appoint a guardian other than your ex.

If you die without a will, it is said that you die intestate. If that happens, then your property and assets will be conveyed according to state intestate succession laws. If your divorce has not been finalized, it is likely that your property will go to your estranged spouse.

Some states, knowing that people neglect to change their wills after divorce, have passed laws preventing a former spouse from inheriting your property if you have been divorced. But property can still be conveyed to family members of your former spouse, and there may be other unintended consequences if you do not update a will you made while married.

Divorces and separations can sometimes take years to finalize, but you do not need to wait to update your will—if you are going through a divorce, update your will sooner rather than later. If you later work things out or remarry the same person (it happens!) you can update your will again. But if you die without having updated your will, and without your divorce being finalized, your former spouse could inherit some or all of your estate, contrary to your wishes.

Retirement plans

If you are divorced, dividing retirement plans is something that will generally be decided by a judge or negotiated out of court. One spouse may choose to pay the other spouse their fair share of the retirement account(s), or you may even be referred to a lawyer who handles the complexities of dividing a retirement or pension plan into separate accounts (a QDRO lawyer; for Qualified Domestic Relations Order).

If you have a retirement plan in place, and are free to do so (under the terms of your separation and divorce), make sure you update your beneficiary designation so that your ex is not a beneficiary. As with wills, some states prevent a former spouse from benefiting from your retirement account after you are gone, but it is best to update the beneficiary designation yourself.

If, for some reason, you do want to make your former spouse a beneficiary, you can make it clear that it was intentional by executing a new beneficiary designation after the divorce is finalized, and write a letter of intent explicitly stating that the designation was intentional.

Changes to life insurance policies

If you have a life insurance policy and you have children, updating the beneficiaries may have been a part of your divorce negotiations or settlement. Make sure that you maintain your life insurance policy as required under the terms of your divorce—whether that is updating it so that your children are the beneficiaries, or keeping your former spouse listed as a beneficiary.

If you are required to keep your ex on your life insurance policy, you can take out a separate policy if or when you remarry. Just make sure you are following the agreement reached during your divorce—failing to keep a life insurance policy as required under the terms of a divorce has been the subject of many lawsuits.

Payable on Death Accounts or Property

If you and your ex had payable on death (POD) accounts or property designations, the accounts will likely be addressed or split as part of your divorce. If you retain any POD accounts or property, make sure you update the designation with your bank or financial institution so that it is not conveyed to your ex when you die.

Trusts

If you have minor children, you should consider setting up a trust to control the assets that go to your children if you die. Otherwise, if your ex is alive and is your children’s guardian, they will be controlling whatever inheritance goes to your children. Setting up a trust allows you to control how and when your kids get payments.

If you and your ex had established a joint trust, and it was a revocable trust, then that means you still have control over the trust property. This will generally be dissolved and the property divided as part of the terms of your divorce.

If you have an irrevocable trust, it cannot be changed once it is set up. Since irrevocable joint trusts are generally created to benefit a couple’s children, that may not present an issue. If you do not have a trust, you may want to create one, to protect minor children and children’s inheritance.

Power of Attorney or Living Wills

If you gave your ex power of attorney while you were married, or listed them as your representative for healthcare decisions (healthcare or medical power of attorney), make sure you name someone else instead. The last thing most people would want is for their ex to have control over all their finances, buying or selling property in their name or calling the shots for medical decisions. If you have a power of attorney in place, then choose a friend or relative to replace your ex.

For more on this subject, read the guide to preparing your financial paperwork for divorce.