Estate Planning Considerations During Divorce
All too often, individuals leave their ex-spouse or ex-partner as their beneficiary on their financial accounts and their agent for their Durable Power of Attorney for health care and property, long after they get divorced. If you are getting divorced, even before your divorce is final, you will want to meet with your estate planning attorney to change your estate planning documents. Here’s why.
If you should die without an updated estate plan, in the state of California, your estate will go to your ex if you don’t have children, or be shared between your ex and your children. If you should become incapacitated, your ex may be making important healthcare and financial decisions on your behalf. That is probably not your intention.
Following are the estate planning documents that you will want to review and revise:
Your trust and/or will – As a married individual, you probably named your spouse as the executor of your estate and the successor trustee of your trust. Now, you’ll want to reconsider to whom you leave your assets. Be aware that you may be limited in the types of changes you can make during the divorce process. If that is the case, definitely update your will and trust, as soon as your divorce is final.
Beneficiary designations – In the state of California, the proceeds of certain accounts are distributed according to their named beneficiaries, whenever the account holder dies. You will want to update the beneficiary designation for your retirement plans, transfer on death (TOD) bank and brokerage accounts, annuities, life insurance policies, and any other assets with a named beneficiary. Spousal consent is required to change the beneficiary on your 401K plan and other qualified plans.
Powers of attorney – If you named your ex as the agent on your Durable Power of Attorney for healthcare and Durable Power of Attorney for property, it is wise to make new power of attorney documents, as soon as you file for divorce. Otherwise, if you are incapacitated, your ex will have unlimited access to your financial assets and can make healthcare decisions on your behalf. In the state of California, your spouse’s powers of attorney are automatically revoked when your divorce is final.
Name an alternate guardian for minor children in your will – If you and your ex have children and you die, in most cases your ex will become your children’s legal guardian. If your ex later passes away without designating an alternate guardian and your children are still minors, the court will look to your will for guidance. Be sure to designate whom you would like as their guardian.
Contact me for assistance
There are many important considerations when getting divorced. If you live in the San Francisco Bay Area and would like to speak with an experienced divorce attorney with a Master of Laws in Taxation, please contact my office for a consultation.
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