Whether or not you did any estate planning during your marriage, if you get divorced there are myriad estate planning issues that you will be faced with. Once the divorce is final and a final decree is issued, it’s crucial to update your estate planning documents to reflect your new circumstances and ensure that your wishes are carried out in the event of death or incapacity. Among the issues that you will need to address are the following:
- Last Will & Testament/Revocable Trust: Your prior estate planning documents likely named your ex-spouse as Personal Representative (executor) of your estate and/or Co-Trustee of your revocable trust. You likely will want to revise or revoke those documents to remove your ex-spouse from any fiduciary role. Furthermore, you will need to consider how you want to distribute your assets among your children, family members, or other beneficiaries.
- Beneficiary Designations: Similarly, you will need to review and update your beneficiary designations on accounts such as life insurance policies, retirement accounts (e.g., IRAs, 401(k)s), and bank accounts. Submitting new Beneficiary Designations is simple and will ensure that your ex-spouse is no longer listed as a beneficiary if that is your intention.
- Power of Attorney/Living Will/Advance Healthcare Directive: You will need to update your financial and healthcare powers of attorney as well if you no longer want your ex-spouse to be authorized to make financial or healthcare decisions on your behalf in the event of incapacity and also revise your healthcare directives to specify your end-of-life wishes.
- Guardianship: If you have young children, while updating your will you can designate a new guardian for them in case something happens to you while your children are still minors. Obviously, you will need to ensure that your ex-spouse’s parental rights and responsibilities are clearly defined.
- Digital Assets: With respect to your digital accounts and assets, you will need to make sure your loved ones have access, preferably with management instructions, usernames, and passwords.
- Estate Tax Implications: Many estate tax advisors contemplate utilizing two estate tax exemptions when planning for married couples. The estate tax exemption in 2023 is just under $13,000,000, which means that for a married couple there may not be any estate tax exposure for estates with a net worth that is under $26,000,000. Accordingly, divorce can have significant estate tax implications since you may be exposed to estate tax liability with only one exemption.
- Real Property Ownership: The divorce decree should specify how jointly owned property should be divided. Unfortunately, it is common for people to neglect to make sure property titles and deeds accurately reflect the new ownership arrangements.
- Regular Reviews: It is generally always a good practice to periodically review and update your estate plan as your life circumstances change, even beyond a divorce.
Call Dana Whiting Law to make an appointment to consult with an experienced estate planning attorney who can help you navigate these issues and ensure that your estate plan is in line with your current wishes and circumstances.