During the dissolution of a marriage, it’s easy for our clients to become overwhelmed with all the changes that are happening. They become focused on the immediate problem of dividing financial or property assets and forget about estate and retirement plans that were made in the event of a debilitating illness or death.
It’s our job to help you and your loved ones avoid future conflict, heartache, and messy financial wrangling down the line. We recommend the following updates for our clients who are divorcing.
1. Wills & Trusts
Wills and trusts are an obvious place to begin. Make sure these important legal documents are updated and that loved ones know where to locate them.
2. Beneficiary Designations
You should also update the beneficiary designations for life insurance policies and retirement funds. This is an often overlooked, but crucial, change to be made during divorce.
3. Health Care Power of Attorney and Living Wills
There are also medical concerns to address. You will likely need to change your health care power of attorney documents naming who will handle medical decisions and advocate on your behalf in the event that you are incapacitated and unable to express your wishes.
In addition, living wills should be updated to reflect not only this change but also your designees of choice.
4. Financial Power of Attorney
A new designation should be made for the durable financial power of attorney, so the correct person has the authority to handle money matters when you are unable to do so for yourself.
5. Estate Planners
Divorcing couples will likely need to change their estate planning attorney. As a couple you probably worked together with the same planner when designing your plans, but when divorcing, you are generally advised to find other planners on your own in order to avoid a conflict of interest. Your current estate planning attorney can make referrals for one or both of you.
6. Qualified Domestic Relations Order
Many people may choose to allow ex-spouses rights to a portion of funds as part of the divorce settlement. You should file a Qualified Domestic Relations Order in order to designate exactly what your ex-spouse is entitled to, and how it should be distributed. This will spell out your wishes clearly and help to alleviate disagreements and legal entanglements in the future.
Divorce is a difficult decision, but you can minimize the long term effects by handling these important estate planning issues right away. We encourage you to tackle these issues head on and avoid costly and painful legal problems for your loved ones down the line.