Not everything goes as planned. We recommend clients revisit their estate plan every 3-5 years just to make sure their original plan still meets their goals. If you are undergoing a significant life change, like a separation or divorce, it is time to move up that timeline if you are not close to the end of your 3-5 year mark.
Why not wait for the divorce to be final? Well for one, you may wish to prevent your current spouse from inheriting or gaining control of your assets if you die or become incapacitated before the divorce is final. We have experienced this in our practice. Second, although a divorce judgment or settlement automatically extinguishes certain of your former spouse’s rights, some documents must be modified to ensure that he or she doesn’t receive unintended benefits.
Here is a checklist of typical estate plan assets you should look into during your separation, and after your divorce is final:
- Revise your Will to exclude your spouse. In many states, including California and Hawai’i, your spouse will retain rights to an elective share until the marriage ends. In California, and other community property states, your spouse will also retain community property rights to a portion of your estate until the marriage is final. However, revising your Will, and Trusts, will limit your spouse to the legal minimum if you die before the divorce is final.
- Change beneficiary designations in IRAs, life insurance policies, annuities or retirement plans. Retirement plans covered by the Employee Retirement Income Security Act require your spouse’s consent before changing her as the beneficiary. Other accounts, such as IRAs, do not require this, and can be changed immediately.
- Revise payable on death (POD) or transfer on death (TOD) designations. If you have named your spouse as a designated beneficiary for a bank or brokerage account, these can be changed immediately.
- Revoke and Revise Powers of Attorney or Advance Health Care Directives. If these documents exist, you have likely named your spouse as an agent. These can be changed before the divorce is final.
- Establish trusts for your minor children. If you have minor children, you may want to establish a Trust to control the assets they may inherit from you so as to limit your former spouse’s involvement and control.
Takeaway
If you are in the process of a separation or divorce, now is a good time to revisit your estate plan to see what steps can be taken now, and what steps cannot be completed until after the divorce is final. Contact CASHMAN LAW today for a free consultation to see how we might help guide you through the important considerations of your estate plan as you transition into your new life.
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