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The Importance of Estate Planning After Divorce


When spouses divorce, there are a lot of things on their minds other than their estate plans. Maybe one’s situation is better, maybe it’s worse or maybe . . . it is just new and strange. And that’s OK. But, eventually, depending on your circumstances and frame of mind and readiness, life will come to a place where you are comfortable making decisions beyond today and will be looking at your future and all the promises it can have.

Our best advice is to gain back some of that control you may feel you have lost through divorce. You can do this to a large extent by understanding, and being informed of, your financial and legal options and prepare yourself to be in charge of making these types of decisions. The reality is that life will go on and your circumstances and those of your family need attention and care. This blog will discuss regaining a sense of autonomy in your estate plans, post-divorce.

There are some legal and financial actions you should take immediately upon your divorce. You need to review and change your Will and/or Trust beneficiaries to reflect your new, post-divorce wishes. You’ll want to make sure that you name in writing your preference for trusted individuals who will take care of you and your children if you were to become incapacitated. Your choice of your minor children’s guardians may have changed and you certainly want someone to help provide for your kiddos financially if something happened to you.

In most cases, parties to a dissolution of marriage do not want their ex-spouse being the beneficiary to their estate. One might also not want to leave their biologically-shared children in a position to be disinherited due to the fact that their ex-spouse may re-marry following the divorce. A surprise to many is the fact that an ex could inherit their property, especially if old estate planning is left in place after the divorce. In Colorado, if you divorce, it is assumed that you DID NOT want your ex to inherit from you, but be aware that you should take proactive steps to revoke old joint estate plans.

If you had a marital joint estate plan, you probably took measures to ensure that your spouse inherited directly from you. However, circumstances might have changed and one might want to make sure all of these beneficiary designations[i] are changed so that your ex-spouse does NOT inherit:

  • Employer retirement plans;
  • Individual Retirement Accounts (IRA);
  • Life insurance plans (including employer-sponsored plans);
  • Annuities and pensions;
  • Health savings accounts;
  • Transfer on Death (TOD) investment accounts;
  • Payable on Death (POD) bank accounts.

In most cases, changing these items is as simple as requesting, completing and filing the appropriate form. Many changes can be completed online. In Colorado and many states, if you remove a spouse as a beneficiary from a retirement account, the spouse needs to sign a release allowing this action. Since you are no longer married, you may be asked to provide a file-stamped, signed and dated copy of your divorce decree to the plan administrator. Changing your beneficiaries is easily one of the most important steps you need to take post-divorce. Since retirement and employer plans often represent the most significant portion of an individual’s net worth, it is particularly important to amend the beneficiary designations on these accounts.

Legal documents that may need to be revoked and redrawn:

  • Your Last Will;
  • Health care powers of attorney and living wills;
  • Financial powers of attorney;
  • Revocable trusts;
  • Advanced estate planning structures such as irrevocable trusts.

You probably no longer want to leave your health care or financial decisions in your ex-spouse’s hands. Therefore, it is imperative to amend one’s Advanced Health Care Directive and Durable Power of Attorney.

Other areas needing attention are the guardianship for your minor children and re-marriage by you or your ex-spouse. In a perfect world, if something happened to one parent, the other parent would assume guardianship of the minor child. However, that assumes that the non-custodial parent desires to raise the child and is fit to do so. If your ex-spouse is likely to assume guardianship, consider that they will be responsible for providing a residence for the child, provide for care and support and education. If you are concerned that monies you leave to your support your child may not be used as you wish if your ex-spouse has access to them, there is an estate planning solution. You can designate in a Revocable Living Trust (RLT) that your successor trustee (after you have passed) provide for specific items out of the funds of the trust such as private school tuition, extra-curricular activities, a car at a certain age, college applications and tuition and more. As a parent, you can protect your child’s inheritance by having an RLT in place with a trustee of your choice to carry out your wishes. This also may protect your assets, which should be for the benefit of your children, and not going to your ex-spouse’s new spouse and/or his or her children, should he or she remarry.

The emotions surrounding divorce can be massive, but don’t let them be debilitating. Take charge. It’s important that you are in control of the distribution of your property and that you’ve made an intentional plan to safeguard and benefit your minor children and heirs. The Harris Law Firm can advise and assist you as you make these important changes to your planning. Call us to find out how we can help.

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