How to Adjust Your Estate Plan After a Divorce
Nobody expects a divorce – no matter how many years you have been intertwined with your significant other, it may seem that bond is severed overnight. One of the most important things you can do during this painful time is protect your assets and ensure your finances are in order. Estate planning is essential to do early because life is unpredictable and if something happens, you want to know that your family is cared for after you’ve past.
Protect Your Assets
All the assets you’ve worked towards achieving in life will distributed as you planned – but what happens when your marriage breaks, do you leave your partner in the will? Give them less assets? Remove their position as the beneficiary? Or cut them out completely? This process can be confusing and overwhelming, that’s what it is essential to contact a skilled estate planning lawyer to assist you in the process.
What Assets do you and Your Partner Own Together?
Estate planning is not simply- who takes the house? It encompasses 401k plans, stocks, life insurance, pension plans, houses, cars, etc. This area can get tricky because some things might be separate property and others might be joint marital property. This affects how assets are divided and pre-made settlements like prenuptial agreements also factor into this decision ahead of time. You and your estranged partner must determine what property is yours such as things you acquired prior to the marriage or inheritance. Marital property constitutes the assets acquired during the marriage, often separated regardless of whose name is on the title of the object.
You have worked your whole life to acquire the assets you now have so be sure you are organized in your division of property.
Update Your Beneficiaries of Your Will
The beneficiary of your will is the one who is granted your assets after death, and they will typically get the assets handed to them without going through the grueling probate process. Usually in marriages, the husband and wife will leave their assets to each other, but after a divorce those feelings typically change and it is necessary to change the beneficiary of your will. For instance, if you fail to remove your ex-spouse from your will and they remarry, their new spouse could inherit your hard-earned assets. In order to protect these situations from happening, update your will and choose another person to be your beneficiary.
Creating a Will vs. Living Trust
Typically, after a divorce, partners will create separate living trusts. Living trust are helpful and easier in many ways compared to a will, first, living trusts most often avoids the probate process in court. In a living trust, you can appoint your children as your beneficiaries so when they reach a certain age they may acquire the assets you left for them without a worry that your ex-spouse will control their finances. Due to the avoidance of the probate process in court, your financial choices are more private and you can dodge pricy fees and extra time spent on creating a will.
Keep a Close Record of What is Yours
In a relationship, it is easy to forget what you obtained prior to your marriage as well as retirement plans and insurance policies over the course. With the help of an estate planning attorney, you should check in every few years to update your information to keep an accurate and up-to-date record of your assets so in the event your marriage breaks apart, you are sure of what you have accumulated over time.
The conversation of divorce is an uncomfortable one, and is often an overwhelming time where the last thing on your mind may be the division of assets. As hard as it may be, ensuring the protection of your assets is crucial to the process and in the end, an updated estate plan will save time and arguments.