Estate planning may be perhaps the last thing on your mind if you're going through the emotional and financial turmoil of a divorce. However, after a divorce, you must update your estate plan. If you don't, your assets may be distributed in ways you don't expect or want when you die, including to your ex-spouse.
Here are three steps you can take to ensure that your estate planning after divorce in California is current and reflects your present life and wishes.
Sign A New Will And Revoke Your Old One
Begin by revoking your previous will and creating a new one. Or, if you don't have a will, now is a good time to write one. It is not difficult; you can create a simple will on your own using a good online resource, or better yet, you can hire a lawyer. The same is true if you made a living trust while married. A will allows you to:
- Leave your property to whomever you want;
- When the time comes, appoint an executor to handle your estate;
- Nominate a guardian to care for young children if necessary.
Divorce may have an impact on all of these options. So let's take a look at them one at a time.
If you're like most people, if you made a will while married, you probably left everything to your spouse and kids, which is perhaps not what you want now. So it's best to start over with a new will, naming new beneficiaries and alternate beneficiaries in case your first choice doesn't outlive you.
If your marriage is dissolved or annulled in most states, any gifts that your will makes to your former spouse are revoked. California law states that the dissolution (divorce) or annulment of a marriage revokes any bequests that a will made to a former spouse. The rest of the will isn't affected.
Name Your Executor
You probably don't want your ex-spouse in charge of your estate if you don't want them to inherit your property. However, if you named your spouse your executor (called your personal representative in some states), this may occur unless you make a new will.
Divorce, in many states, nullifies a former spouse's appointment as executor of a will or trustee of a trust. Therefore, they would take over if you named an alternate executor in your will. Still, don't rely on state law—appoint a new executor and an alternate one in your new will.
Name A Guardian For Your Children
One of the main reasons that many parents of young children write wills is to name a guardian to raise their children in the unlikely event that neither parent can. If you have children under the age of 18, this is probably one of the reasons you want to make a will.
A court will designate a guardian to care for a child only if both parents are deceased or unfit to care for the child. On the other hand, courts will only find a parent unsuitable if there is a serious and ongoing issue, such as a record of child abuse or addiction. So if you don't want your ex-spouse to raise your kids in the event of your untimely death because you don't think they are a suitable person or a good parent, you probably can't avoid it.
Update Your Beneficiary Designations
Your will, as crucial as it is, may also cover some of your most valuable assets. Many assets pass to beneficiaries named on the paperwork provided by a bank or insurance company without the use of a will. As a result, make sure to update your beneficiary designations for:
- Policies on life insurance;
- Retirement accounts;
- Payable on death accounts;
- Transfer on death accounts.
When naming a new person to inherit these assets, make sure to request new documents from your bank, brokerage company, or employer and submit them as soon as possible.
Create New Powers of Attorney
Powers of attorney—documents that give someone authority to act on your behalf if necessary—are an essential component of an estate plan. You should have two powers of attorney: one for medical decisions and one for financial matters. If you already have powers of attorney in place that allow your ex-spouse to make decisions on your behalf, revoke them and create new ones.
Everyone will have a different take on this, but for us, the best way to handle it is to keep your estate plan in place with a revocable living trust and just update the beneficiaries to reflect who will inherit your assets. If you don’t already have a living trust, then you can use your divorce as an opportunity to draft one so that all of this is taken care of in advance. We hope this helps and good luck!