Don’t Let Divorce Distract You From Important Estate Planning Considerations

Although life would be much simpler if it stayed the same for long periods of time, the truth is that it is constantly changing. People come into your life unexpectedly and exit just as frequently. Regarding estate planning, or preparing the transfer of wealth to loved ones after death, one of the most unforeseen challenges one may ever have to endure is a divorce. Considering that the divorce rate among married couples is currently nearing the fifty percent mark, it is important to understand the process of making any proper adjustments to your estate plan so that all intended beneficiaries get their allocated cut of the estate.


What happens if I don’t amend my will? What is the default?

Although estate planning will probably be the last thing on your mind after a divorce, you should certainly make sure that you are aware of state laws regarding wills. In most states, probate law tends to side with the writer of the will; upon divorce, an ex-spouse is automatically removed from the list of beneficiaries, as well as the role of the executor (the person named in charge of handling the deceased person’s financial obligations). Though this kind of law is common in the United States, not every state may offer such a convenience. In addition, state laws are often susceptible to revision, so merely relying on the state to remove any unintended beneficiaries from your will may not always be successful, especially since most states require an official court order of divorce to even consider the possibility of removing an ex-spouse from a will. In the case that your death occurs while you and your spouse are seeking a divorce, the last will in your estate plan would still be considered valid, and the soon-to-be-ex-spouse would end up being a recipient of any assets formerly intended for them.

In the event that you remarry after the court successfully issues a final judgement of divorce, there are three basic steps you should follow to ensure that your estate is handled on your terms after your passing. You should revoke your will and write a new one, update the beneficiaries of financial assets, and declare new powers of attorney in case you become unable to make financial decisions for yourself.

Step 1: Revoking/Rewriting Your Will or Trust

After you remarry, your first move (estate-planning wise) should be getting rid of your last will, and rewriting it to match your present circumstances and include beneficiaries of your currently owned assets. As a general matter, writing a will is a relatively simple process. You can generate a basic will online with a free template, or, if your situation merits a more complex will, you can hire an estate planning attorney to facilitate the process of clarifying which assets would be passed down to each spouse.

Unlike a will, a trust does not have to be entirely scrapped in order to change beneficiaries. Generally, an amendment to a trust should explain the changes, specify additions or deletions of property, and simply be signed and dated, and placed back into your estate plan documents.

Step 2: Updating Beneficiaries of Non-Property Assets

The second step involves the transfer of non-property assets. Though a will is necessary to transfer ownership of property, many intangible assets such as life insurance, retirement accounts, and other financial assets are passed outside of a will. In fact, the Employee Retirement Income Security Act (ERISA), which deals with the transfer of these assets after the death of the account holder, states that the estate administrator must distribute the funds to those named in the plan’s documents, regardless of state law. Keeping this in mind, it is critical that the person, be it a spouse or other family member, to whom you wish to transfer these assets upon your death be explicitly named. You may do so by requesting the appropriate documents from the institution in which you hold the account.

Step 3: Designating New Powers of Attorney

The final step you should take after remarrying is designating new powers of attorney. Because these documents give someone the authority to act on your behalf, usually a different person for financial and healthcare matters, you should definitely make sure to revoke the powers of attorney from your previous marriage, and write new ones if one of the people to whom you are delegating this authority to is your spouse.

Though a divorce can certainly be an emotionally rampant experience for any individual, proper estate planning is essential for your assets to be distributed consistent with your intentions. In the case that you remarry and forget to amend your will or trust, you risk your assets being passed down to the wrong spouse, should the state law not automatically revoke your former spouse’s designations, or squandering a significant portion of your estate, should your former spouse contest your last will. No one expects to go through a divorce, but in the case that you do, you will save yourself and your family a lot of headaches knowing that your assets are in the appropriate hands.