In the first part of this series, we discussed a couple of the most critical updates you must make to your estate plan if you’re getting divorced. Here, we’ll cover the last three of these must-do planning tasks.
Because getting divorced can be overwhelming on so many different levels, updating your estate plan often takes a back seat to other seemingly more-pressing priorities. But failing to update your plan for divorce can have potentially tragic consequences, some of which you may have never before even considered.
In fact, it’s critical that you update your plan not only after the divorce is final, but as soon as you know the split is inevitable. Until your divorce is final, your marriage is legally in full effect, so if you die or become incapacitated while the divorce is still ongoing and you haven’t updated your plan, your soon-to-be ex-spouse could end up with complete control over your life and assets.
For example, if you suddenly die of a heart attack while the divorce is ongoing and never got around to changing your estate plan, it’s quite likely that your future ex would inherit everything. And if that’s not bad enough, if you were to become incapacitated in a car accident during the divorce, the very person you’re paying big money to legally remove from your life could be granted complete authority over all of your legal, financial, and healthcare decisions.
This is something your divorce attorney may not think to bring up, but it’s literally one of the most critical matters you need to handle if you’re ending your marriage. Last week, we discussed the first two estate planning changes you must make—updating your power of attorney documents and beneficiary designations—and today we’ll share the remaining three.
3. Create a new will
You should create a new will as soon as you decide to get divorced, because once you file, you may not be able to change your will. Rethink how you want your assets divided upon your death. This most likely means naming new beneficiaries for any assets that you’d previously left to your future ex and his or her family. And unless it’s your wish, you’ll probably no longer want your ex—or any of his or her family—listed as your will’s executor or administrator, either.
Michigan has laws providing elective share rights that entitle your surviving spouse to a certain percentage of the marital estate upon your death, regardless of what’s in your will. This means that if you die before the divorce is final, you probably won’t be able to entirely disinherit your surviving spouse through the new will.
However, it’s almost certain you wouldn’t want him or her to get everything. Given this, you should update your will as soon as possible once divorce is inevitable to ensure that the proper individuals inherit the remaining percentage of your estate should you pass away while your divorce is still ongoing. Generally, once the divorce is final, the law automatically revokes any provisions in your old will that gave assets to your former spouse.
In light of the complex legal landscape, it’s critical that you consult with us as soon as you know divorce is on the horizon. We can help you understand the law and how to best navigate it when creating your new will—whether you do so before or after your divorce is over.
4. Amend your existing trust or create a new one
If you have a revocable trust set up, you’ll want to review and update it, too. As with wills, you should aim to alter your trust as soon as legally possible before filing for divorce. In addition to reconsidering what assets your ex-spouse should receive through the trust, you’ll probably want to replace him or her as a successor trustee if they are so designated.
And if you don’t have a trust in place, you should seriously consider creating one, especially if you have minor children. Trusts provide a wide range of powers and benefits unavailable through a will, and they’re particularly well-suited for blended families. Given the likelihood that both you and your spouse will eventually get remarried—and perhaps have more children—trusts are an invaluable way to protect and manage the assets you want your children to inherit.
By using a trust, for example, should you die or become incapacitated while your kids are minors, you can name someone of your choosing to serve as successor trustee to manage their money until they reach adulthood, making it impossible for your ex to meddle with their inheritence.
Beyond this key benefit, trusts afford you several other levels of enhanced protection and control not possible with a will. So you should at least discuss creating a trust with an experienced law firm like ours before ruling out the option entirely.
5. Revisit your plan once your divorce is final During the divorce process, your main planning concern is limiting your soon-to-be ex’s control over your life and assets should you die or become incapacitated before the divorce is final. Given this, the individuals to whom you grant power of attorney, name as trustee, designate to receive your 401k, or add to your estate plan in any other way while the divorce is ongoing are often just temporary.
Once the divorce is final and your marital property has been divided up, you should revisit all of your estate planning documents and update them accordingly based on your new asset profile and living situation. From there, your plan should continuously evolve along with your life circumstances, particularly following major life events, such as getting remarried, having additional children, and/or when close family members pass away.
Don’t wait; act now!
Even though divorce can be one of life’s most difficult transitions, it’s vital that you make the time to update your estate plan during this trying time. Meet with us as your personal family lawyer to review your plan immediately upon realizing that divorce is unavoidable.
Putting off updating your plan, even for a few days, during a divorce can make it legally impossible to change certain parts of your plan, so take action now. And if you’ve yet to create any estate plan at all, an impending divorce is the perfect time to finally take care of this crucial task. Contact us today to get the process underway with a Life and Legacy Planning Session.
This article is a service of Legacy Counsel PLC, a trusts and estates law firm in Saint Joseph, Michigan. We don’t just draft documents; we ensure that you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life and Legacy Planning Session, during which you will get more financially organized than you’ve ever been before and become empowered to make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session.Mention this article to find out how to get this $750 session at no charge.
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