Updating Your Estate Plan After Divorce

Why Estate Planning After Divorce Is Urgent

Updating your estate plan after divorce is one of the most important and most frequently overlooked tasks. Without updates, your ex-spouse could potentially inherit your assets, make medical decisions on your behalf, or serve as guardian of your children. Do not delay this critical step.

Documents That Need Updating

Your Will

Your existing will likely names your ex-spouse as a beneficiary and possibly as executor. While some states automatically revoke provisions that benefit a divorced spouse, not all do, and relying on these laws is risky. Create a new will that reflects your current wishes regarding who inherits your assets, who serves as executor, who is named as guardian for minor children, and any specific bequests or conditions.

Power of Attorney

If your ex-spouse holds your power of attorney, they can make financial decisions on your behalf if you become incapacitated. Revoke this immediately and designate a new trusted person.

Healthcare Directive

Your healthcare proxy or medical power of attorney allows someone to make medical decisions for you if you are unable to do so. If your ex-spouse is named, update this document with a new designee.

Living Trust

If you have a living trust, it likely needs significant revision. Update the beneficiaries, successor trustees, and terms of the trust to reflect your post-divorce intentions.

Beneficiary Designations

Beneficiary designations on certain accounts override your will. This means that even if your will says everything goes to your children, your ex-spouse will inherit any account where they are still named as beneficiary. Update beneficiary designations on life insurance policies, 401(k) and IRA accounts, pension plans, annuities, bank accounts with payable-on-death designations, and investment accounts with transfer-on-death designations.

Note that some beneficiary designations, particularly on retirement accounts, may be governed by your divorce decree or QDRO. Consult with your attorney before making changes to ensure compliance with your settlement agreement.

Guardian Designations for Minor Children

If you have minor children, your will should designate a guardian who would raise them if both parents were unable to do so. After divorce, this designation becomes even more important. Consider who you would want to raise your children if both you and your ex-spouse were unable to, whether you and your ex-spouse can agree on a guardian designation, and whether your chosen guardian is willing and able to serve.

Life Insurance Considerations

Your divorce decree may require you to maintain life insurance with your ex-spouse or children as beneficiaries, particularly if you pay child support or alimony. Review your decree carefully before making changes to life insurance beneficiaries. You may also want to obtain additional life insurance to protect your children's financial future.

Digital Estate Planning

Do not forget about your digital assets. Update passwords and access information for email accounts, social media, online banking, cryptocurrency wallets, and other digital accounts. Consider including a digital estate plan that specifies who can access these accounts and what should happen to them.

Take Action Now

Estate planning after divorce is not something to put off. Schedule a meeting with an estate planning attorney as soon as your divorce is final. The cost of updating your estate plan is minimal compared to the potential consequences of failing to do so.

You are not alone on this journey. Get matched with a divorce support specialist.