During the financial and emotional upheavals of divorce, there are many estate planning and financial issues that are easily overlooked. People generally remember to amend their wills or revocable trusts after a divorce. Other arrangements you will need to address include:
Powers of attorney. Is your former spouse still named as your representative in any financial or health care powers of attorney or similar documents? In some states, a divorce automatically nullifies powers of attorney; in other states, you may need to rewrite them.
Jointly owned assets. Be sure your former spouse doesn't retain access to joint assets, such as bank accounts, investments, or real estate.
Retirement accounts. Did you designate your former spouse as the beneficiary of any IRAs, 401(k) plans, or other retirement accounts? If so, you need to amend the beneficiary designations for those accounts.
Life insurance. If your former spouse is the beneficiary of your life insurance policy, it's likely you will want to update the beneficiary designation.You should also consider whether your life insurance needs have changed in light of the divorce.
It's important to take action quickly after a divorce to avoid inadvertently enriching a former spouse at the expense of your children, new spouse, or other family members.
Questions? If you need help reviewing your estate plan in light of a divorce, please contact us.
Scott T. Ditman, a tax partner and Chair, Personal Wealth Services at Berdon LLP, advises high net worth individuals and family/owner-managed business clients on building, preserving, and transferring wealth, estate and income tax issues, and succession and financial planning.