Did you finalize a divorce in 2018? If you did, you beat the clock when looking at the new tax laws that went into effect January 1, 2019. The new tax laws will have a big impact on how some areas of divorce are handled, including alimony. You can read our assessment of the plan here.
There are other areas of your life, however, that could be affected by these new laws. If you recently finalized a divorce, it’s time to update your estate plan. Truth be told, if you divorced at any time in the last few years, you should probably review your estate plan, anyway. You want to make sure the information is correct, up-to-date, and relevant to your needs.
Updating your Will
Do you really want your ex to “get it all”? More importantly, do you really want him/her to have the ultimate say in where your assets go after you die? If you want to leave your money to your children, or to a charitable organization, or into your business, then that needs to be clearly stated in the Will.
When you visit your estate planning attorney, bring a copy of the divorce decree with you. This way, your lawyer can see exactly what needs to be left in the Will, and what can be changed without violating the order. As part of this update, you can address:
Transferring the durable power of attorney
One of the most important areas of your estate plan is your designated power of attorney (POA). Most married people name their spouse as their POAs. Now that you are divorced, you may not want your former spouse being able to make decisions regarding your finances and other intimate aspects of your life when you can no longer make those decisions. You can change your designated POA
Editing your healthcare POA
Is your healthcare POA different from the person you chose to make financial decisions for you? If so, you may need to update this portion of your estate plan, too. For most, the health care proxy is a spouse, but you can also name one of your children, one of your siblings, or anyone else you trust. The thing to remember is, if you do not designate a healthcare power of attorney, then your ultimate wishes may not be followed.
Updating your beneficiaries for your accounts
It’s important for you to review all of your beneficiary designations. You want to make sure that the beneficiary designations on your 401(k), your retirement accounts, your pension, etc. match the divorce agreement you signed. This doesn’t mean you can’t leave your wealth to someone else; it just means that, if your divorce decree states that your ex is entitled to half of your 401(k), that he or she only receives that half. If you don’t update your beneficiaries, your new spouse and/or your children – as well as step-children, or anyone else you care about – may be left with nothing.
This is a critical step in regard to your life insurance policy, too. If you are required to give half of this policy to your ex, but you name someone else in the Will, then your loved ones will be in for a long, potentially contentious fight.
Protecting your minor children
Do you still have minor children, or children with special needs? If so, it’s time to review the guardianship plan. It’s perfectly normal for you to keep your former spouse named as a guardian for your children upon your death. They most likely will be the guardian anyway. But, if your former spouse has a substance or alcohol abuse problem, or is abusive, you need to reconsider your options.
If you have a trust set up for your children, you should review that, too. If there is no trust present, and your former spouse is the guardian of your children, he or she will have all the control over any money you leave. When you create the trust, make sure you name someone who will control it if you die before the children hit 18.
If you have gotten divorced but not yet updated your estate plan, now is the time to do it. Contact the team at Shepherd and Associates, P.C. to schedule an appointment with an experienced estate planning attorney in our Maryville office. Our team serves clients all throughout Tennessee. Call the office today at 865-225-9655 or complete the contact form on the website.