Estate Planning Post-Divorce: Things to Consider as you Plan for a New Future
Proper estate planning is important for each of us. A good estate plan saves your heirs the time, heartache, and expense of going through what can often be a confusing and often contested process through the probate courts. A thorough estate plan can also save your heirs lots of money in federal taxes.
However, implementing or, when necessary, updating your estate plan is perhaps even more important once you are divorced in the State of Colorado. While the process of getting a divorce can be painful and difficult, this additional step should not be overlooked. And, again, this additional effort can provide you and your family critical protection and peace of mind.
Typically, when someone dies, the process to decide how their property transfers to other people depends upon the type of property and whether the person had executed a will or other estate planning documents. Some types of assets (like life insurance policies, certain retirement policies, and pay-on-death accounts) transfer automatically by the terms of those specific accounts or assets. Other property will be transferred through probate, a legal process overseen by the courts. If the person has prepared a will or other estate planning documents, then the probate court will attempt to implement those documents. If the person dies without a will, then the process of “intestate succession” applies, which is a process decided by the legislature to dictate how property should be divided in those circumstances. The process of intestate succession in Colorado can be complicated once a party is divorced, as it could result in a new spouse inheriting property that the spouse would rather leave to children of a prior relationship or could result in all that party’s property being left to the party’s children but without any clear guardian to manage the property for them.
Regarding children, one of the most common questions people have is whether they can guarantee who will take care of their children if something happens to them. Although parents can designate their preferences in their estate planning documents, the probate court will ultimately have to determine what is in the best interests of the children, and that can be particularly complicated when children’s parents are divorced. This is a good reason to work with an estate planning attorney to provide as much protection as possible for your children.
If possible, one should try to work with your soon-to-be-ex-spouse while you are going through the divorce process to see if you can reach any agreements regarding who would be your children’s guardians or how the children will maintain relationships with each side of their families if one of their parents dies.
When you divorce, you will also want to redo your will. First, and perhaps obviously, you will probably want to remove your former spouse from the will. Although in many jurisdictions provisions of a will that leave part of the estate to a spouse are presumed to be void once the parties divorce, that does not answer the question of what should happen to any property that would previously have gone to your former spouse, so creating a new will is recommended. Second, you will likely also want to make sure you state clearly how you want your estate to be divided and who you want to manage any assets you leave to your children. Third, your actual estate probably changed considerably after your divorce because what was the marital estate has now been divided between you and your former spouse. Your new will should take into consideration the actual property you now own and should delete references to property that now belongs solely to your former spouse or that has been sold. In addition, you will want to modify any powers of attorney or health directives that may currently designate your former spouse as the person to make decisions on your behalf if you are incapacitated.
In addition to modifying your estate planning documents, you will also want to check your life insurance policies, retirement accounts, pay-on-death accounts, and any other assets that specifically designate who should receive those accounts if something happens to you. When you do, make sure your Permanent Orders or Separation Agreement do not dictate that you have to make a particular account payable to your ex or to your children as security for some other obligation.
Although it is understandable to overlook these additional, legal steps, meeting with a qualified estate planning attorney is an important step in planning your new future. If nothing else, it lets you take charge of your own estate and make sure that your affairs are handled the way you want them to be.