It is not easy if you’re entering into a divorce situation, and can often be an intense emotional rollercoaster. Your mind likely reels with all the relational implications, to-dos, and upcoming changes. One thing you might not have considered is the implications of an impending divorce on your estate plan.
If you are like many others, your current estate plan likely leaves most everything to your spouse. You may have also given powers of attorney to your spouse, which gives them legal rights to handle your personal affairs. These kinds of pre-existing arrangements can be navigated calmly and quickly with the right guidance. We’ve put together four simple ideas to consider before your divorce is even filed.
- Will: Before you file your divorce, you should engage an attorney with solid experience in family law and estate planning. They can help you with any necessary will changes prior to the divorce filing. You may want to consider leaving property and other assets to children or other beneficiaries. There are legal issues to consider when completely removing your spouse from a will so consult with your attorney about your options. You can also name an executor at this point to handle estate matters for you.
If you are a parent, you could also decide to set up a children’s trust so that assets are protected for funding health, education, and other needs for your children down the road. It’s critical to select a competent and trustworthy trustee to handle these assets (we recommend a corporate trustee). It’s also wise to select a guardian—if you haven’t already—to take care of minors should something happen to both of you.
- Powers of Attorney: It’s no fun to think about worse case scenarios, although it makes sense to plan for the unexpected. Prior to filing your divorce, it’s a good idea to set up advance directives like selecting a financial durable power of attorney and a medical durable power of attorney (it could be the same person for both). This allows you to choose a trusted person or persons (often a parent, sibling, trusted family member, or friend) to make sound decisions on your behalf, should you become unable to do so on your own.
- Life Insurance: Now is also the time to make any beneficiary changes in your life insurance policy. People often shift beneficiaries from their current spouse to older children, another family member, close friend, or beloved charity. Parents can also name a children’s trust for this as well. We strongly encourage you not to name minor children as beneficiaries, for multiple reasons. For example, minors cannot legally take assets over $10,000 under Indiana law without a guardianship (someone handling these affairs for them).
- Retirement Accounts: IRAs, 401k funds, and other retirement accounts can be tricky to handle during a divorce. There are federal laws that protect married spouses. And because you are still married, you probably can’t disinherit your soon-to-be ex-spouse from retirement funds at this point in the process. It’s best to consult with your financial advisor or plan administrator for specific guidance here.
With a divorce on the horizon, you have enough on your shoulders. Let us help you navigate estate planning or family law issues. Contact us at 765.742.9066.
Read the other two posts in this estate planning series here:
The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.