If you’re divorcing, it’s important to review your estate plan as early as possible, for two reasons: First, you may wish to revise your plan immediately to prevent your spouse from inheriting or gaining control over your assets if you die or become incapacitated before the divorce is final. Second, although a divorce judgment or settlement automatically extinguishes certain of your former spouse’s rights, some documents must be specifically changed to ensure that he or she doesn’t receive unintended benefits.
Consider revising your will and any revocable trusts to exclude your spouse. Note that, in many states, your spouse will retain elective share or community property rights to a portion of your estate until the marriage ends. But revising your will or trust will limit your spouse to the legal minimum if you die before the divorce is final.
If you have irrevocable trusts, determine whether they provide for your spouse’s interest to terminate automatically upon divorce. IMPORTANT: Consult your divorce attorney to see if changing your will or trust during the divorce will violate any automatic orders in place.
After the divorce is final, you should probably:
- Change beneficiary designations in IRAs, life insurance policies, annuities or retirement plans (note that federal law prevents you from removing your spouse as beneficiary of a retirement plan, without his or her consent, until the divorce is final),
- Revise payable on death (POD) or transfer on death (TOD) designations in bank or brokerage accounts,
- Revoke powers of attorney or health care directives naming your spouse as agent, and
- Establish trusts for your minor children. (If they inherit assets from you outright, a court will likely appoint your former spouse as guardian.)
Finally, bear in mind that, under the Tax Cuts and Jobs Act, any alimony paid is no longer deductible by the payer or taxable to the payee.
Divorce is a major life event. Contact us to help you review and revise your estate plan as necessary.