Even the most amicable divorce is a difficult process for all involved. The dissolution of a marriage requires both partners to untangle complicated legal and financial matters. An estate plan is obviously based on the assumption that the marriage will continue. Therefore, if the relationship changes, the estate plan must change as well. Most estate planning attorneys recommend paying close attention to the following aspects in order to avoid unnecessary problems in the future.
Update Your Will
You should execute a new will and remove your spouse as executor of your estate. You must then decide how much you want to leave your spouse and what he or she is entitled to under the laws of your state. In some cases, disinheriting your spouse entirely may be a complicated process, as he or she has the right to contest the will and gain a specific percentage of your assets. However, it is ultimately up to you how much or how little you want to leave to your former marriage partner.
Change Your Health Care Proxy
Although the odds may be small depending on your age and other factors, it is possible that you may become ill or injured before your divorce is final. If a catastrophic event should occur, chances are you would prefer not to have your soon-to-be-ex listed as your health care proxy. Therefore, you should name a different person for this task as soon as possible.
Update Your Power of Attorney
You and your spouse may have executed powers of attorney in the past. If you chose durable power of attorney, you essentially gave your spouse access to your assets and accounts. This is a cause for concern, especially if your divorce is not amicable. The power of attorney given to your spouse should be revoked by your lawyer.
Ask your estate planning attorney about what you can and cannot alter. You may not be able to change pensions, retirement accounts, or life insurance beneficiaries until your divorce is final.
Amend Your Trust
If the laws in your state allow you to make amendments to your revocable trust, these should be made without delay. Similar to your will, the primary question you must answer is how much money and assets you wish your spouse to receive. You may decide to remove gifts for his or her family or make other change as well. However, the most important issue with regard to trusts is provisions for minor children: you may not want your spouse having access to and managing their money. If this is the case, have your estate planning attorney create a revocable trust that names an individual you have selected as the trustee. Otherwise, if you die, your spouse will automatically gain control of your children’s money.
Review Prenuptial and Postnuptial Documents
You should review your prenuptial agreement in light of your divorce. This document will state exactly what your spouse is entitled to should you pass away. When you draft a new estate plan with your lawyer, it must be consistent with your prenuptial agreement terms.
Reviewing Your Estate Plan After Your Divorce
Your estate plan should be revisited once you receive your final divorce decree. This is because changes made during the process are often only temporary from a legal standpoint. After the dissolution is complete, review all documents with your estate planning attorney to determine which parts require post-divorce updating.
Having an estate plan in place is an important task in virtually anyone’s life. However, once an estate plan is created, it should not simply be placed in a drawer and forgotten about. Rather, estate plans should be reviewed from time to time by an estate planning attorney. This is because the need for occasional revisions is not an uncommon situation. As a general rule, if the estate plan is five or more years old, it is time to review it and make sure it is still appropriate. Below are some examples of when it is time to have the plan re-evaluated:
Executors and Trustees
Trustees and executors are individuals who implement an estate plan and in some cases, they are also the people who determine whether or not it is an effective plan. Many individuals do not give the appropriate amount of consideration to these appointments. However, even if the people were selected with great care, a change in circumstances may make it necessary to reconsider whether or not they are still the most appropriate people for the job. After several years have past, another person may be a better choice: someone may no longer be able to perform the duties, or an appointed person may have even passed away.
If a person has moved to another state, it is important for him or her to understand that estate planning laws are not national, but vary from one state to the next. Therefore, there may be a variance of laws concerning living wills, advance medical directives, powers of attorney, and similar issues. Anyone who has moved should make sure these documents are updated in accordance with the laws of the new state or parts of the plan may become null and void.
Outdated Retirement Plans
Retirement plans can sometimes become outdated, but this occurrence is commonly overlooked by many individuals. Updating beneficiary designations of 401(k)s, IRAs, and other retirement plans is essential. The beneficiary of such accounts is the person on file with the estate plan, not necessarily the will or trust. This is why this issue often falls through the cracks, as such forms are often unreviewed for a decade or more.
A Change in Liabilities or Assets
If assets or liabilities changed significantly in the value of a person’s estate since the original plan was created, it should be reviewed. This is true regardless of whether the estate’s value has decreased or increased. The owner of the plan must decide if the original way the property was divided is still desirable in light of the change in circumstances. Ultimately, all changes call for reassessment of the plan.
Additions to the Family
Documents may also need to be revised by estate planning attorneys if there are new additions to the family. For example, a person may wish to place a new grandchild in his or her will or the person may have been divorced and want to remove a former spouse from claiming an inheritance. Revised documents must be created to reflect these new preferences or the old ones will remain in place. Beneficiary designations also dictate who receives certain assets, financial accounts, life insurance or annuities. All forms should be reviewed by an estate planning attorney and amended, if necessary.
If you have questions about updating your estate plan, contact our estate planning attorneys in Orange County or Corona today!
Finding a city that is both a pleasant and affordable place in which to retire is a task that many people undertake each year. Fortunately, there are interesting and attractive US cities that offer a manageable tax burden and a low cost of living to such individuals. Below are some great places that our estate planning attorneys have learned about for soon-to-be retirees who wish to enjoy their golden years while keeping costs under control:
Safe and Convenient Kendall
Convenience and safety are two reasons the city of Kendall, Florida ranks high among retirees looking for an affordable place to live. Seniors have reported feeling safe walking through the city’s downtown section any time of the day or night, and the crime rate in the city is very low. Additionally, a post office, beauty salon, pharmacy, restaurants, supermarkets and medical offices are all within walking distance from the town’s center. The cost of living in Kendall is six percent lower than the national average and the tax burden is also well below the country’s average. Additionally, Florida residents pay no individual income tax.
Great Living in Huntsville
The cost of living in Huntsville, Alabama is approximately five percent less than the national average and is a tax friendly state for retirees. Work opportunities are also higher than the national averages for seniors who wish to supplement their income. This city in the heart of Dixie is also filled with attractions and activities that retirees can access easily from most residential neighborhoods.
Taking it Easy in Savannah
Featuring a low crime rate and easy to navigate roads and highways, Savannah, Georgia ranks high on the list of affordable retirement cities. Well known as a tax friendly area for retirees and boasting a cost of living that is 9.4 percent below the national average, this picturesque city has an appeal for those searching for a beautiful, yet affordable place to retire.
Revitalized Pittsburgh Cost-Effective Choice for Northern Retirees
With one of the lowest tax burdens for seniors and a cost of living below the national average by more than eight percent, Pittsburgh, Pennsylvania is a great choice for retirees who are not necessarily looking for a warmer climate. Here, seniors can ride the city’s buses and trains for free on a daily basis, and easily accessible healthcare is always available due to Pittsburgh having revitalized itself by investing in medicine.
Safe and Tranquil Palm Coast
Retirees looking for a tranquil, safe and affordable Florida city need look no further than Palm Coast. This peaceful community has a low crime rate, a cost of living that is six percent below the national average, and a relatively low tax burden for seniors. Retirees are usually pleased to discover that due to its location on Florida’s upper East coast, it is also less touched by serious storms than other areas of Florida. Palm Coast has retained most of its natural beauty throughout the years, and therefore many retirees find it a tranquil, yet thriving community.
Affordable Living in Fayetteville
Fayetteville, Arkansas boasts a cost of living that is 10 percent less than the national average. Although not quite as tax friendly as the cities mentioned above, its lower cost of living and the broad range of senior friendly services offered by the county offset this factor. Additionally, plenty of low cost attractions and activities are found in the county, as well as an easy-to-use public transportation system that can be accessed by senior citizens for free.
Did we miss some place? Let our estate planning attorneys know at firstname.lastname@example.org.