Often, after the time, expense, and emotional upheaval of divorce, the last thing on anyone's mind is estate planning. It's one of the things on the list of things to do LATER. The reality is that just post-divorce IS the best time to do estate planning. It's on your mind since you're working to get the rest of your life in order, and it's really not that hard, and in fact rather than being draining or difficult, can be empowering and help you to really feel like your life has restarted.
Here are the key estate planning items you need to take care of post-divorce:
1. Revoke, destroy (or amend) old documents
If you have not already revoked or destroyed old powers of attorney, health proxies or other documents naming your ex-spouse, do so. Even if the divorce automatically makes those documents void, why tempt anyone? Do you want your former spouse to be holding an original signed health proxy authorizing him or her to make your medical decisions? pull the plug if you are hospitalized?
2. Sign new documents
Usually about the last thing anyone wants to do after a divorce is hire a lawyer or spend more money on legal fees. But you really need to update all of your documents which frequently name an ex-spouse, an ex-spouse‰Ûªs family or friends that have sided with your ex. Revise your documents and name people as fiduciaries you can trust to take care of you and respect your wishes.
Will/Trust: Create a new (or initial) Will (and possibly a Trust) to protect your assets and your beneficiaries. The Will is crucial because you name successor guardians for minor children; a Trust allows you to set the ages of distribution to children after your death (later than age 18) and to name a Trustee (potentially someone other than your ex-spouse) to be in charge of the money (even before age 18).
Power of Attorney & Health Care Proxy: Sign a new power of attorney (naming someone to make your general/financial decisions during your lifetime) and a new Health Care Proxy (naming someone to make your medical decisions if you can't make or communicate them).
Irrevocable Life Insurance Trusts (ILIT's): If your ILIT does not have a provision for what happens in the event of divorce, you might have to cancel the policy in the ILIT and/or let the insurance in your ILIT lapse, and purchase new life insurance outside the ILIT (the ILIT would then be empty), so that the proceeds won't be held for the benefit of your former spouse at your death.
3. Revise beneficiary designations
Update/change the beneficiary designations on retirement plans (IRA's 401K's, etc.), life insurance and POD (pay on death) or TOD (transfer on death) accounts. These assets pass directly at your death and not through your Will, so it's essential to change these. Sign new beneficiary designation forms and send them to each plan sponsor certified mail return receipt to prove you filed them.
4. Retitle jointly owned assets
Make sure your assets are re-titled in your name only. Jointly held assets pass directly at your death and not through your Will.
5. Address College Savings
If your ex-spouse is the account owner listed on your child's 529 college savings plan he/she can pull the money out at any time. Be sure to get a neutral party listed as account owner, or you might be able to name a trust with co-trustees as the account owner.
6. Inform your network of your new status
Let people know you're no longer married, like banks, health care providers, and other trusted advisors so no one gives out personal or confidential information inadvertently.
7. Talk to your parents about estate planning
If your parents are living, talk to your parents about their estate planning ‰ÛÒ they may have named your spouse in their documents and they would need to revise them as well.
Attorney Robin Gorenberg has over 20 years experience in estate planning and probate matters. She works with all types of clients, from simple to complex, and explains things so that you can understand them. Robin was quoted in the NY Times on how to choose the executor of your estate.