Going through a divorce can be an emotionally and financially draining process. Amid the many changes that come with ending a marriage, updating your estate plan might not be at the top of your priority list. However, it should be. Why is this step so important?
Updating your estate plan ensures that your assets go to the right people.
One of the most compelling reasons to update your estate plan after a divorce is to ensure that your plan reflects your current wishes. During marriage, it is common for spouses to name each other as the primary beneficiaries in wills, trusts and on accounts like life insurance policies and retirement plans. After a divorce, you likely have different plans. Failing to update these documents could mean that your ex-spouse still stands to inherit your assets.
An updated plan can protect your children’s future.
If you have children, updating your estate plan post-divorce is essential to protect their inheritance. This includes appointing trustees or guardians who you trust to manage any assets your children might inherit until they are of age. This is especially important if your children are minors, as you will want to ensure that people you trust will care for them if something happens to you.
Updates allow you to redefine who can make decisions on your behalf.
Post-divorce, it’s crucial to review and possibly change who has power of attorney. These roles are often filled by a person’s spouse, and allow them to make financial and medical decisions for you if you cannot make those decisions due to illness or injury. Reassigning these roles ensures that the individuals making financial and healthcare decisions on your behalf are ones you trust and who understand your current preferences and values.
Updating your plan can provide you with peace of mind as you start the next chapter of your life.
Lastly, knowing that you have documented your wishes can offer you peace of mind. This can significantly reduce stress and provide a sense of security, not just for you, but also for your loved ones. Taking a proactive approach can be especially comforting during a time of significant personal change such as a divorce.
Updating your estate plan after a divorce is not just a matter of legal necessity. It is also a crucial step towards ensuring your peace of mind and securing your family’s future according to your current wishes.