You have put off doing your estate planning for the last 10 years. You knew you should do it. You knew you'd eventually need it. But it felt like something over which you could procrastinate, something you actually wouldn't need for decades.
That may or may not be true. Unfortunately, there are many things in life that you can't predict, such as accidents and diseases. You know that, but you have still put it off.
Now your spouse has asked for a divorce. The marriage is ending, and nothing is going to be the same for you and the three kids. You have a lot of details to sort out and a future to plan.
Do these seem like two unrelated events? They're not. In fact, right after getting divorced is the perfect time to make your estate plan, especially if you have children. Even if you already have a plan, this is when you need to go over it and update it. Here are a few steps to take:
- Change your plan -- or draft one -- so that your assets pass to your kids and not to your ex-spouse.
- Take a look at the way your assets changed in the divorce and update your paperwork as needed.
- Pick a new health care proxy or change your power of attorney so that your ex is not the one making the calls if you can't make your own health care decisions.
- Update your life insurance policy. Remember that you can pick a beneficiary and have the policy pay out directly to them, keeping it out of your estate.
- Update your plan to reflect the loss of major assets. For instance, maybe you originally had a plan to leave the home to your three kids equally, but then you and your ex sold the home to split up the money during the divorce.
- Consider your retirement funds and your pension plan. Does your ex have a right to any of that money? Do you need to change the beneficiaries so that the money goes to your children, just like you did with the insurance policy?
- Decide on what will happen to the kids if you and your ex pass away. Do you both need to pick guardians for them?
- Update any parts of the plan that may reference your marriage. For instance, if you made a trust to lower the taxes on your estate, you may still want to use it, but only after updating it to reflect your new status.
The above are ways to update your plan, but they are also critical things to do for the first time if you have not done your estate planning yet. No matter where you are in this process, carefully consider what steps to take after divorce.