Without question, divorce is a painful and overwhelming process. Paperwork, custody battles, attorney’s fees; the list of tasks and emotional rollercoaster can seem to be never-ending.
But just as important as signing the divorce papers and working out custody, after a divorce, you must make changes to your estate planning documents.
“X” Your Ex Out of Your Will.
While most divorced people would agree that the last person they want to get their property or to make life and death decisions for them is their “Ex,” people often overlook updating their will or health care documents after a divorce.
That is exactly what will happen if you do not update your estate planning documents after a divorce. Unless you change your will and other necessary estate planning documents, in some states, your Ex will still inherit your property.
Change Your Beneficiary Designations.
Assets like life insurance policies, IRAs, annuities, etc. that let you name a beneficiary, are not controlled by your will or trust. Instead, they get paid directly to the person that you have named as your beneficiary.
While you were married, you probably named your Ex as your primary beneficiary.
After a divorce, it is important to change the beneficiary designation to someone else.
Consider Setting Up a Trust For Your Children.
One of the problems that arises after divorce if you have children is that if you have named them as beneficiaries and they are minors when you die, a court guardianship will be established for them until they become 18. As soon as they turn 18, however, your children will receive the entire inheritance. (And just might spend it by the time they turn 19.) The court could name your ex-spouse as the person to manage the funds until that time.
To avoid this, you might try to name someone else as the beneficiary with the understanding/promise that this person (your friend, your parent, your sibling) will use the money for the care of your children until they are old enough to handle it themselves. But what are the chances this person really will do as you ask?
One of the ways to solve this problem is to name a trust as the beneficiary instead, and select your own trustee (which could be that trusted person). A trustee can be held liable if he/she misuses the trust assets. This solution lets you keep your ex-spouse from having access to the money and control when your children will inherit. Even better, money that is in a trust is protected from irresponsible spending by your children and from creditors or even spouses.
Divorce can be stressful and exhausting, but planning for your new future doesn’t have to be. We are here to help you every step of the way. One of the best things you can do after divorce is to update your estate plan to provide for your future and the future of those you love.
Get Started Today!
We are estate planning attorneys with offices in Sedona, Arizona. We offer free consultations and we are available to service all of Arizona. We can help you with your estate planning needs. Contact us to set up your free appointment.