With all the emotions and stress that accompanies a divorce, many couples often ignore the estate planning consequences that come with ending a marriage. While it can be difficult to set aside time to address these issues, both spouses need to take estate planning concerns into consideration in order to ensure there are no problems in the future. Here are three tips you can use to help guide you through the process.
Tip 1: Create a new Will. Because state law gives each spouse in a marriage the right to inherit from the other, both spouses will need to update their Wills as soon as the divorce is finalized. Even if you wish to include your former spouse as a Will beneficiary, you’ll need to make changes because your prior Will probably addresses spousal inheritance laws that no longer apply.
Tip 2: Create new Powers of Attorney. Spouses have the right to make decisions on behalf of an incapacitated spouse, though divorced couples no longer have that right. If you want someone else to be able to make medical decisions for you, you’ll need to create a new Medical Power of Attorney or other advance directive. Similarly, any Financial Powers of Attorney that you created naming your former spouse as your agent will also have to be changed.
Tip 3: Secure life insurance. Life insurance policies that benefit minor children of a marriage often need special attention in the divorce, and you’ll probably need to speak to your attorney about creating an Irrevocable Life Insurance Trust. The Trust will ensure that the life insurance proceeds will be protected if either spouse should remarry, as well as protect against estate tax issues.