Estate Planning and Financial Loose Ends After Divorce
Following the emotional and financial turmoil of a divorce, people are understandably focused on their own well-being, helping their children through the transition, and moving on to the next chapter of their lives. This can lead to their forgetting to consider the impact a divorce has on their estate plans – such as wills, beneficiary designations, powers of attorney, and advanced healthcare directives (living wills).
As practitioners of both family and estate planning law, Freed Marcroft’s lawyers are in a unique position to assist clients in revising and updating their estate planning documents so that their assets will not be distributed in ways that they neither expect nor want—including to an ex-spouse.
Unfortunately, in some circumstances it is not possible to revise your estate plan prior to the finalization of the divorce. For example, in Connecticut, the Automatic Court Orders that go into effect when the initial dissolution action is served prevent either party from, among other things, changing their insurance beneficiaries while a divorce is pending. As a result, once a divorce is final, it is especially important for individuals to update their documents.
The assistance of an attorney familiar with both family law and trusts and estates and probate can assist you in ensuring that your documents are updated to reflect your new wishes, but do not violate the court’s order in your divorce.
Some items to consider include:
1. Wills and Trusts
Following a divorce, you should update your will and any trusts to:
- Leave your property to the people of your choice.
- Name an executor and trustee to handle your estate when the time comes.
- Nominate a guardian to take care of young children if it’s ever necessary.
2. Beneficiary Designations
Many assets pass outside of a will, to beneficiaries named on paperwork provided by a bank or insurance company. Beneficiary designations for life insurance policies, retirement accounts such as IRAs and 401(k)s, annuities pay-on-death bank accounts, and transfer-on-death brokerage accounts should be updated to name your desired beneficiaries in accordance with your dissolution agreement.
3. Powers of Attorney
Many people choose to revoke powers of attorney that gave their former spouse the authority to act for them. Often they chose to execute a new power of attorney in favor of an alternative attorney-in-fact.
4. Advanced Health Care Directives (including living wills, appointment of a health care agent, and appointment of a conservator)
Many married people execute documents giving their spouse the authority to make critical health care decisions on their behalf. Following the dissolution of the marriage, you should review and revise these documents to reflect your current wishes.