If you are in divorce proceedings or already divorced, remember to update your Estate Plan after Divorce.
Neglecting this step could have unintended, unpleasant and unanticipated consequences.
To prevent potential conflict of interest, it is best to work with a different estate planner than whom you used while together.
As you review your estate planning documents, remember to include your power of attorney and health-care proxy. Destroy the old document and complete a new one naming new proxies noting that this document revokes and replaces the previous document.
When you create an inventory of estate planning forms, you can check them off as you update them. Go over documents designating beneficiaries. This group comprises insurance policies, retirement accounts, annuities, brokerage and bank accounts whose proceeds pass to the named person regardless of what a will states. You need to make changes by sending in a newly completed form to the financial institution holding the policy or account.
What happened in this case reinforces how important it is to keep current with your estate plans. In 2013, the US Supreme Court ruled in favor of the ex-wife of a man who died in 2008 and who neglected to change the beneficiary on his $124,588 life insurance policy to his current wife after divorce.
Another important step is communicating your changes to all affected parties and providing them with copies or locations of significant documents. This helps avoids the following situation. A Ms. Lewis made a will in 1996 that named her current father-in-law as a secondary beneficiary on a family property. After the divorce, New York law automatically removed her ex-husband from the will but not the father-in-law. After her death, he presented the 1996 will to the court. Although, she had executed a new will changing the beneficiaries, the family was unable to produce it as evidence in a court hearing. Now, the costly dispute is still in process.
Many people will set up a living trust to protect their assets for their heirs. Living trusts can shield beneficiaries from issues such as divorce, lawsuits, creditors, long-term care expenses and bankruptcy.
Estate planning has importance for everyone, regardless of financial situation. Please contact us for information.