After a divorce, there are a number of key issues that you need to address as you update your estate plan or create a plan for the first time.
- Change your estate planning documents, including the last will and testament so your ex-spouse no longer inherits. You probably don’t want your ex-husband or ex-wife to inherit money when you pass away. This means you need to change your will. You should also remove your ex as a beneficiary from other estate planning tools, such as life insurance policies. Simply changing your will is not sufficient if you have named your ex as beneficiary on an insurance policy; if you jointly own property; or if you have a pay-on-death account which instructs the account to be paid to your ex after you pass away.
- Account for estate tax. When you are married, you may pass on all of your money and property to your spouse without triggering tax. When you are leaving your assets to someone other than a spouse, you could end up owing a considerable amount in estate tax if you have a larger estate and you haven’t made estate tax avoidance plans.
- Make plans in case of incapacity. If something happens to you when you are married, normally your spouse will be able to make decisions on your behalf and manage your assets – many of which are probably shared. However, if you are no longer married, there may not be an obvious person you would want to make decisions on your behalf if something happens to you. You should decide who is to act on your behalf and handle your assets when you are unable, and use legal tools, such as a power of attorney to express your preferences.
- Adjust your retirement savings plans. When you are married, your combined income could determine whether you are allowed to make tax-deductible contributions to an IRA. If you are now single, you need to learn how your tax situation has changed and make updated plans to save for a secure retirement solely dependent upon your own individual savings – rather than the combined savings of you and your spouse.
These are just a few key issues you should address with help from an estate planning attorney after a divorce. Sinclair Prosser Gasior can assist you in making an updated estate plan that protects you and provides for the people you love. We’ll make sure you don’t leave an unwanted inheritance to an ex, and we’ll help you to address any other key issues that can arise after a divorce.