How Marriage and Divorce Affect Estate Plans

Having an Estate Plan is the best way to insure that your family is protected from probate, taxes, and the unexpected upon your death. Your Estate Plan will direct how your assets will be divided -and if done right – will leave provisions for covering debt and other expenses, and avoid family fights and other problems.

Marriage and divorce significantly affect your Estate Plan if you have one, and make estate planning even more important if you do not. However, even happily married couples often procrastinate creating an Estate Plan thinking their spouse will automatically get everything – including the responsibility of managing the estate. Here are some things every couple needs to know about marriage, divorce and estate planning.

Getting Married

Marriage proposal. Man with boquet of flowers kneeling and give engagement ring for his girlfriend

First, both newlyweds will need to change the beneficiary on their insurance policies, existing wills or trusts, retirement accounts and health savings accounts. You both will also need to decide if you want to designate a secondary beneficiary in case you both die, or if you want to leave more detailed instructions in a will or trust.

Next, you will need to update any existing wills or trusts. Or, if you don’t have one, this would be the perfect time to get one. It’s important for your new spouse and you to know how you want your assets allocated should anything happen to you both, how much you want parents and children to get and who should oversee your matters should you both become incapacitated. If you have a prenuptual agreement, a new Estate Plan will probably be required to follow the requirements of the prenup (normally there is always a prenup for second or later marriages).

As part of your Estate Plan, you will also need to create financial and medical durable powers of attorney, otherwise your spouse will not be able to handle your individual affairs should you become too ill to do so -being married is not enough in California. Powers of attorney are even more critical for unmarried couples, as you will have no rights to take care of each other without them.

Getting Divorced

Once the divorce process is started, you are restricted from making changes to your Estate Plan, assets and beneficiaries. Your divorce attorney will explain this to you. However, it is important to start updated your Estate Plan, starting with your powers of attorney. You probably don’t want your soon-to-be former spouse able to make your financial and medical decisions during the difficult divorce process.

After divorce, you will need a new Estate Plan. You will replace your old marital Will and Living Trust, update beneficiaries, nominate Guardians for minor children of your choice, determine who will handle your affairs upon incapacity or death, and otherwise insure that your “new” affairs are in order. We cannot count how many times a family has come to us upon a loved one’s death only to learn that their former spouse is still the beneficiary of old life insurance polices and retirement plans – don’t be that person!

Are you getting married or divorced? Or do you just have questions about your Estate Plan? Contact us today to schedule your consultation or Estate Plan review.

5 Important Reasons to Review Your Estate Plan

Despite the world still having 100% mortality rate, planning for the inevitable is rarely something we look forward to. No one wants to think about their own mortality – and our families can be even worse; choosing to bury their heads in the sand rather than think about losing us.

Senior couple doing the income tax declaration online

That’s why many put off estate planning – or worse – never get to it at all.  And for those who do it, oftentimes, it gets done, you think it’s over and you shove it in a drawer and never think about it again. Sound familiar?

Not reviewing your estate plan on a regular basis can be almost as bad as not having one at all. Changes in your family, finances, investments, and laws can make the best laid estate plans, wills, and trusts, moot. Leaving your family with exactly what you wanted to avoid; questions, confusion – and worse, lengthy and costly probate.

Here are 5 reasons you need to review your estate plan:

1.   Family changes. It may be obvious that if you get a divorce, lose a spouse or child, or adopt a child (or disinherit one) that an estate plan review is in order. But did you know that this also applies to your children and other heirs?  If THEY get married, change their names, get a divorce, adopt children, or have any other changes in their family, it might be a good idea to take a look at your plan and see if any changes need to be made. This is also true in the case of incapacitation of a spouse (yours or your heirs’).

2. Changes in income. Whether it’s retirement, bankruptcy, inheriting money, winning the lottery (nice problem to have!), buying investment property (especially if it’s out of state), this is a huge reason to get your plan reviewed.  If it’s not included in your plan it opens your family up to expensive probate and other problems once you’re gone. 

3.  Changing state of residency. Trust and estate planning laws can vary by state – especiSenior couple in love during retirement - Happy elderly conceptally if moving from a common law to a community property state. So if you move be sure to contact your estate planning attorney for a review. 

4.  Changes in the law. You can’t possibly know every law and how it    affects your estate plan, and you especially aren’t expected to keep up  on changes in the law! A good estate planning attorney will do that for  you – and should contact you for an estate plan review if changes in the  law affect you.  We update our clients by email.  If you would like to add  yourself or your friends and family to the list, please click here.

5.  If you’re in doubt. If you are ever in doubt about anything, it’s best to check with your estate planning attorney to find out if you need to review your plan. It’s always better to be safe than sorry.