Your estate plan is, or should be, a plan you continuously update to prepare for the changes life throws at you, both good and bad. People expect to make changes when they come into more assets, or after a parent or family member dies, but there is another life change that people often neglect to adjust their estate plans for, or wait far too long to address: divorce.
Divorce is a painful and difficult event to go through, no matter how long you’ve been in the relationship. There are a myriad of questions you have to address before, during, and after the process. Topics like child custody, alimony payments, and asset division come to the top of mind for most, and often wills and estate plans are pushed aside or entirely forgotten. It is vital to make sure you address your plans with your spouse and any beneficiaries, and make the needed adjustments quickly, before it’s too late.
Here are a few key items to address regarding your estate plan:
Power of Attorney
Chances are, you and your spouse executed powers of attorney during your marriage. Make sure to talk to the attorney that drafted your power of attorney documents, and get clarification on what you and your spouse agreed to. If you signed a durable power of attorney, your spouse may have access to all of your accounts and assets even while you are still competent, and even if the assets are solely in your name. If that is the case, you can revoke power of attorney and execute a new one.
Research What Can and Can’t Be Changed
Certain beneficiary designations can be changed, while some cannot. In most states, employee benefits such as life insurance, retirement accounts (like a 401k), and pensions can’t be changed until after the divorce is finalized. Filing a complaint for divorce can place an automatic restraining order on many of assets, but it is important to make sure you know exactly what will and will not be protected during the process.
Update Your Will
Executing a new will is an important step and should not be put off until after your divorce is finalized. In Georgia, filing a complaint for divorce does not negate your will or any provision you made for your (soon-to-be former) spouse in your will. If you should pass away before your divorce is finalized, your spouse will still be entitled to inherit either under your will or, if you do not have a will, through the laws of intestacy. You can avoid this result by changing your will or, if you do not have a will, creating one.
Guardianship of minor children will almost always go to the remaining parent, but outside of custody, changes can and should be made quickly.
Amend Your Trust
Changing your will is not the same thing as changing your trust. If your divorce has not been finalized, you should consult with your divorce attorney to make sure that you are allowed to revise your trust(s) while the divorce action is ongoing.
Once you are cleared to make changes, you and your estate-planning attorney can amend your revocable trust to change or remove provisions in favor of your spouse and their family. If you named your spouse as trustee of your revocable trust, you will likely want to remove them and designate a new trustee.
If your trust is irrevocable, you may still be able to make some changes. The Georgia Trust Code now allows for the amendment of irrevocable trusts in limited circumstances. Your trust document may also permit you to change some provisions. You can also negotiate with your spouse and get them to renounce their rights under your trust as part of your divorce settlement.
Revisit Your Plan After The Divorce
Many of the changes you make to your estate plan while your divorce is ongoing will not be necessary (or necessarily ideal) after the divorce is final. You should revisit your estate plan again after your divorce to make sure all it meets your needs and desires going forward. At this point, you should make sure that all of your beneficiary designations are correct, any joint accounts are properly titled, and your powers of attorney have been updated.
Divorce is painful and difficult, but managing the financial side correctly will make the process easier, and give you greater peace of mind as your move forward.
