Don’t Make These Estate Planning Mistakes After Your Divorce
If you are one of the lucky divorcees who was able to finalize their divorce in 2018, congratulations. 2019 has brought along with it a slew of tax changes, some of which will have a negative impact of divorcees. For one, alimony will no longer be tax deductible for the payor. For two, the receiver will receive less alimony on account of the payor having to pay more taxes. Really, a lose-lose situation that only adds to the pain of divorce. You’re lucky to have closed the door on your divorce last year!
So, let’s try to minimize the amount of financial pain you feel in 2019…and beyond. For those of you who are officially, legally divorced…it’s time to review those estate plans.
I know. You’ve just been through the stress of divorce and you want to stop and take a break from all the legalese. But it’s important to update your estate plan to ensure your care or financial matters aren’t left in an ex-husband or wive’s name. Talk about pain!
Here are 9 estate planning issues you should be thinking about if you just got divorced:
1. Keep your estate planning attorney in the know. What have you agreed to provide to your ex-spouse should something happen to you? This is important information for your attorney to have.
2. Was your spouse your healthcare proxy? If so, you may want to consider changing this—unless you want your ex to be responsible for making healthcare decisions if you become incapacitated.
3. Was your spouse named in your power of attorney? Revoke it, and execute a new power of attorney naming a family member, advisor close friend.
4. Update your will and trust. Ensure your ex-spouse won’t be the beneficiary of your assets in the event of your death.
5. Do you need to rethink guardianship of your minor children? Maybe your ex-spouse should become the legal guardian of your children after you pass. But maybe he or she has a substance abuse issue or is otherwise unfit. In that case, your estate planning attorney can help you determine the best course of action as far estate planning goes.
6. Create a trust for your children. This is especially important if your ex will be named the legal guardian of your children in the event of death or incapacitation. With a trust in place, you can rest assured that your ex will not have control of your children’ inheritance.
7. Are you required to maintain a life insurance policy? Not abiding by your divorce agreement can cause costly and emotional litigation in the future.
8. Review your beneficiary designations. Your beneficiary designations should be consistent with the terms of your divorce agreement.
9. Planning on remarrying in the future? Do yourself a favor and put a prenuptial agreement in place.
The process of getting divorced is long and painful, and once your agreement is finalized it’s so tempting to just exhale and revel in the fact that the whole ordeal is over. But taking this one last step and making sure your estate plan is addressed after a divorce will give you 100% peace of mind, knowing that your ex is out of your life (at least as much as possible) and that you can move forward without any baggage weighing you down.
Ask the Estate Planning & Divorce Attorney
Have questions about updating your estate plan after your divorce? Take the opportunity to ask me one question, free of charge. I’ll get back to you with an answer that will help guide you along your journey.
I’m also an immigration and family law attorney, so feel free to ask a question about any of these subjects!