Divorcing? Now Is The Time To Update Your Estate Plan
An estate plan is only as good as its most recent iteration. Almost any major life event should prompt a call to your estate lawyer. Divorce is another important life event signaling several financial changes and a need to make some updates. To find out how a divorce can affect your estate plan, read on.
Don't Wait Till Things Are Final
Marriages can take time to finally end. Months and months could go by between the time you separate and the divorce becomes final, and there is always the chance you could pass away before that occurs. Unless there is a chance for reconciliation, see your estate lawyer as soon as you know you are divorcing. You should also realize that even if things are final with your divorce, the law provides no coverage for some issues unless you address them separately. In some states, spouses are held in a protected status after the death of a spouse. No matter how close you were to divorcing, a married spouse can inherit some property, even if the will leaves them out. Often, an estate that tries to leave out a spouse could be divided by leaving at least one-third of the estate to the spouse if married at the time of the death. Be sure your estate plans are updated and that your wishes are protected during the separation period and beyond.
States Vary in Regard to Divorce and Wills
Probate and estate law is very much a state law issue. Some states, for example, will automatically invalidate a will when the divorce becomes final. That means that in those states, you could end up dying intestate. Unfortunately, that means that state law (and the local county probate law judge) decides who inherits your property after your death using succession rules. Be sure you take action so that your will remains valid and current.
Life Insurance Issues
Life insurance is a major part of an estate plan and one that can slip under the radar. Be sure you take action as soon as the divorce is a sure thing to change the beneficiaries on your policy. Life insurance policies are not probated and are not subject to challenges, so make sure the beneficiary named is the one you still want on there.
Another estate issue that is out of probate's grasp is account designations. Payable-on-death or payable-on-transfer plans allow you to name a person or persons to take ownership of a bank or investment account immediately after a death. New forms should be filled out and signed as soon as possible after a split to ensure the funds go to the right beneficiaries.
Your estate plans are too important not to keep updated, so speak to your estate planning lawyer about any upcoming big life events right away.