When should you update your estate plan? We are asked this question quite a bit and the answer we have always shared the “Six D’s” with our clients: death, divorce, diagnosis, distance, dividend and dates.
We discussed in Pt. 1: The First “D” the life event of a new diagnosis. We discussed a new diagnosis for a loved one, person you have named to take a role in your plan or a new diagnosis for yourself. That should prompt you to pull out your estate plan, read it over, think about whether you want to make changes or need to make changes.
We are now sharing the next “D” when you should pull out your estate plan from the safe, drawer, closet, desk drawer or event uncover it off your countertop and think about whether it still makes sense: divorce.
If you are going through a divorce or the divorce is finalized, then you should think of whether you need to update your estate planning documents. Why?
Well, legally, if you and are spouse are married there exists naturally some legal rights to the others estate depending on whether you and your spouse had an estate plan together and, the big one, whether there are beneficiary designations naming each other. A divorce doesn’t change beneficiary designations usually and there are known times when an ex-spouse will receive someone’s life insurance or another asset like an investment account if the designations are not updated. Having a new last will & testament won’t change that, but going through the process with an experienced, thorough estate planning attorney will prompt you to pull out your documents, accounts, policies and review the designations.
Also, having a former spouse named on old estate planning documents will confuse the professionals who need to know who is in charge if a health care or financial decision needs to be made for you. Having clear expectations and guidance allows less chaos, less confusion, less time to elapse.
Finally, I work with a large number of women who have no desire for their former spouse to control the money they advocated to receive in the division of marital assets. The last thing you want is for those same assets to now be under the control of that spouse.
We work with women who have transitioned through divorce to think about their estate plan now as a way to protect themselves, their children, their home and other important assets. We help them understand how the process works, we encourage them to pull out all documents which perhaps wasn’t thought of during the divorce and think whether that is what they want now, during this chapter of their lives.
In addition to the potential for divorce for a client, what happens if the person you have named in your plan to take care of you or your kids is going through a divorce? Perhaps you should pull out your plan and review it to see if having them named still makes sense, OR, makes even more sense now.
Divorce is a reason to pull out your documents, review them, think about your choices and see if the choices still make sense. Divorce is one of the Six D’s of when you should pull out your estate planning documents and see if the choices you made still make sense. If they don’t give us a call and we can help update your plan to what makes sense now.