Estate Planning and Divorce
If you are newly divorce its is extremely important to either update your estate plan or create one. As a newly single individual you will need to ensure that you have a plan in place in for your loved ones.
It’s important to update your estate planning documents after divorce; and if you have not done your estate planning post-divorce is an excellent time to complete them.
Usually married individuals designate each other as beneficiaries and fiduciaries for their estate plans. When a divorce is finalized all of this planning becomes mute. There are state laws that impact the beneficiary designations and of course most divorced spouses no longer want their ex serving as their fiduciaries or inheriting their assets. Here are some estate planning issues to consider.
Update you Last Will and any Trusts – Fiduciaries and Beneficiaries
A will is a legal instrument which predetermines the distribution of a person’s assets after death. A trust is a legal instrument which is established for the purpose of holding or using assets on behalf of a predetermined beneficiary. As a default matter, whenever a divorce occurs in Colorado, the law automatically removes ex-spouses from wills and trusts as beneficiaries. Also by default, once an ex-spouse is removed, he or she will be replaced by a “contingent beneficiary.” In many cases, this contingent beneficiary may not be who you want your entire estate to flow to. Thus, it’s very important to update your will and either dissolve or revise any trusts in order to ensure that assets are going in the desired direction. There may be a chance, for whatever reason, that spouses wish to include their ex-spouse in a will. This means they will need to take the proper steps and ensure that the ex-spouse isn’t automatically removed by operation of Colorado law.
You may also need to select a new trustee. Trusts have grantors, trustees, and beneficiaries – the grantor is the trust originator or creator, the trustee is the manager, and the beneficiary is the recipient of the assets of the trust. If your selection of a trustee is no longer appropriate, given the divorce, then you need to update the documents to reflect your current wishes regarding the care and management of your trust property.
If you have minor children it is important to name guardians and trustees for them in your documents. This might be the ex-spouse or a close and trusted friend or relative. Either way as a newly single parent it is super important that you update your wishes in regards to your children. This might include creating a trust for them should something happen to them, providing resources for their well being, etc.
Update your Agent for your Powers Of Attorney
Powers of attorney are used during disability with a named agent stepping in to manage the financial and/or medical concerns of the party. In many cases, people designate their spouse as the agent for the POAs for the purpose of managing their affairs, and this designation should be revisited upon any divorce.
Reach out for a quick consultation
These are just a few of the estate planning considerations that you will need to think about following divorce. Whether you need to update your estate plan or create one – post divorce is an excellent time to get your affairs in order. The clarity provided to your loved ones should something happen to you is priceless. Schedule now.