Divorce is a challenging time causing extreme emotions and concerns over the future. There are many decisions to make, but it’s essential to protect your financial well-being by revising your estate plan.
Wills or trusts that were created years before the end of a marriage can be an afterthought for many people, and not taking steps to change key documents or beneficiaries can have devastating effects.
Estate planning actions in a divorce
Once a divorce takes effect, there are several actions that help you gain control over managing your health and assets, including:
- Update health care proxy: If you are incapacitated after a car accident, do you still want your ex-spouse making medical decisions for you?
- Change power of attorney: If your spouse is listed as your durable power of attorney, they still have complete access to all your accounts and assets. Revoke that document and establish a new one.
- Revise your will: Pennsylvania law automatically removes a former spouse as an heir after a divorce. However, it’s essential to review the document and make changes, especially if your ex is the sole beneficiary.
- Reconsider guardianship for minor children: Your ex-spouse will likely serve as guardian of your children in the event of your death. You may want to consider naming someone other than your ex if they have a substance abuse problem or other behavior placing your kids at risk.
- Consider a trust for minor children: Without a trust, your ex-spouse will control your children’s finances until they turn 18. Creating a revocable trust and naming a person of your choosing to administer it helps you maintain some control.
- Review beneficiary designations: Many people forget to change their beneficiaries for insurance policies, stocks, bonds and retirement accounts, such as 401(k)s and IRAs. Don’t assume your spouse will be removed as beneficiary and understand that proving to a financial institution that you are no longer married can be time-consuming and costly.
Tie up those loose ends in a divorce
Forgetting to change vital documents in your estate plan can cause many unintended consequences that go against your wishes for the future distribution of your property. An attorney experienced in both estate planning and family law here in Pennsylvania can help you achieve your goals for protecting your family’s future.