Tuesday, April 7, 2009

Don't Forget to Update Your Will and Estate Plan After Divorce

I send my clients a letter with their final divorce papers. I always advise them to update their wills and estate plans. Most of them don't do it. I think I will start being more proactive because it is important. Here are a few things you might want to consider:

Who has power of attorney for health care?
Is it your former spouse? Do you want that?

Do you want to leave your estate to your former spouse?
The divorce invalidates that portion of your will. If you want your former spouse to be the recipient, you need to restate that after the divorce.

The divorce and a new will won't change beneficiaries on your insurance and retirement accounts
You must fill out new beneficiary forms. Don't think just making a will takes care of it.

Did you set up a trust account for your children? If you did, did you make the trust the beneficiary on your insurance?
Often clients don't want children to inherit large sums of money all at once when they are 18 and set up a trust to handle the money until they are older. The largest sum often is the insurance proceeds and if the children are the beneficiaries they will receive the lump sum when they are 18. You should name the children's trust as the beneficiary.

What documents should you have along with a will?

You should have

A will (Last Will and Testament)
Power of Attorney for Health Care

Health Care Directive
Durable Power of Attorney


Valerie said...

Karen, I love that you give your clients this advice. I often meet with people with old estate planning documents. When I say "old," I mean 10, 15, even 20+ years have gone by since those documents were drafted...and they have NEVER been reviewed!

A divorce is a perfect example of what I call a "triggering event" - particular times in life when something changes enough that your estate plan needs a review. Many lawyers will do an estate plan review for free.

What I'd love to know from your readers, and the world at large, is why there's such a widespread tendency to ignore this stuff?

On another note, Karen - I respect your desire to bring a collaborative, cooperative, and "drama-free" approach to family law. A welcome change, and one we could use in all practice areas!

Best wishes,

Farris Law, PLLC

Leanna Hamill said...

Karen, I have done a series of posts on this subject on my Massachusetts Estate Planning Blog, www.HamillLawOffice.com . I'm glad to see an attorney who reminds their clients that the work isn't done just because the divorce is final.

After having given a seminar on this topic, I have had a few clients who come to see me to change their health care proxies and financial powers of attorney before starting the divorce process.

Leanna Hamill,