Divorce is a headache
Let’s face it. In addition to the emotional elements involved in dissolution of marriage, there are a whole lot of logistical hurdles and to-dos.
We’re about to add one more. (Sorry.) We know—that’s the last thing you want to hear, but trust us. Comparatively speaking, this one is a piece of cake, but it’s incredibly important. It’ll save you money, time, and more nasty headaches in the long run. And we’ll help you knock it off your list.
Here it is: Update your Estate Plan
When you get divorced, your (ex-)spouse is automatically removed as a beneficiary on your assets (think: life insurance). Convenient, right?
Yes—except for one thing. A divorce proceeding removes your spouse as a beneficiary, but it does not automatically replace that beneficiary. You need to designate new primary beneficiaries, or one of the following will likely happen:
Your estate could fall into the wrong hands. If you’ve designated secondary beneficiaries, your assets will default to them. We’ve seen many instances in which a member of the ex-spouse’s family is listed as the secondary beneficiary. That doesn’t automatically change just because you’re getting divorced. Do you really want your former mother-in-law to collect your life insurance policy if something happens to you? Yikes!
Your estate could end up in probate court. If you haven’t designated a secondary beneficiary, your estate could end up in probate court. Many people assume that an asset will automatically pass to their children if their ex-spouse is removed as a beneficiary and no one else is listed, but that’s not the case. Read more about the probate process here to understand why it’s in your best interest—and the best interest of your loved ones—to properly plan and avoid probate if possible.
Your assets are only one part of the equation. You also want to ensure that you update your will, health care directive, and/or power of attorney to appoint someone you trust to make decisions on your behalf. It’s common to appoint an “in-law” to serve as your backup decision-maker if your spouse cannot act for any reason. But if you do not update these documents post-divorce, an ex-sister-in-law could be making the decision as to if/when the doctors “pull the plug.”
A divorce should be a fresh start. Make sure that your Estate Plan reflects your new relationships, your new life, and your new priorities. If you have children, you can designate them as beneficiaries or set up a trust for them that gives you control over if and when they inherit your assets. (For example, you can require that your child reach a certain age or achieve a triggering event, such as graduating from college, before they are eligible to receive a distribution from the trust.)
A post-divorce Estate Plan accomplishes several important goals:
- Ensuring that your wishes are carried out in the event of your passing
- Gives the right people the power to call the shots on your behalf
- Preserves your estate for your children or other desired beneficiaries
Even though divorce is a headache, estate planning doesn’t have to be. It’s a straightforward process that can usually be carried out in approximately two weeks—or even less, if there’s a reason for urgency. Johnson/Turner Legal offers estate planning services with flat fee pricing so there are no unpleasant surprises. We handle all of the nitty gritty paperwork and logistics so you can focus on building your new, headache-free life.