Having a solid estate plan is important, no matter what your age or situation, but when someone divorces, it is extremely important. Divorce is an ordeal, even under the best of circumstances, but it is important to remember that not only will a divorce cause problems within your family; it can also make a mess out of your estate.
When you divorce there are a number of details that you must pay attention to. The first is dividing all of your assets according the agreement of your divorce. Even when you have done this, you will still have many more details to attend to. Your estate plan is probably the next most important.
You will need to ensure that you have changed your will, and updated your financial accounts, retirement accounts and insurance policies. If you fail to do this, your family could end up with a disaster if something were to happen to you. For example, if you forget to update your life insurance policy and your spouse is named as your beneficiary, that person will get the insurance settlement, even if you have remarried. This is also true of your retirement accounts, annuities, and pay on death financial accounts.
In most cases a former spouse will automatically be excluded from your will, even if you forget to update it, this isn’t the case with your financial accounts and insurance policies. All of these assets go directly to the beneficiary, without going through the probate process.
If you remarry, you will likely want these assets to go to your new spouse, or possibly your children. To ensure that these assets go where you would want them to go, do not forget to updates these accounts once your divorce is final.
Another area of your estate plan that should be changed after you divorce is your Medical and Durable Power of Attorney documents. Unless you feel comfortable with your former spouse having Power of Attorney to represent you incase of illness or disability, you will want to make sure that you appoint a new Power of Attorney.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.