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Estate Planning Steps to Take Immediately Following a Divorce

Posted on: August 31st, 2015
estate planning divorceA divorce involves various important and often stressful steps, including division of assets and debts and determination of custody. Many recently divorced individuals are focused on rebuilding their lives independently or with a new partner. Unfortunately, the process typically is not complete once divorce papers are signed. A divorced individual has a few critical estate planning areas to address. Depending on the state where the divorce was filed, a former spouse might need to go to greater lengths to ensure their estate plan is in order. For example, provisions in a will that favor an ex-spouse are invalid in Florida. However, our estate planning attorneys explained a recent case that involved a Florida will dispute that involved a former deceased spouse’s outdated will. 

Regular plan reviews are ideal, but when significant life changes like a birth, death, marriage, or divorce occur, individuals should update plans more frequently. Divorce in particular raises many concerns. Our estate planning attorneys review several items those who are newly divorced should address as soon as the divorce decree is finalized, as well as a few other times below:

Immediately After Divorce 
 
  • Review the separation agreement with an estate planning attorney. This process can help identify important assets and to make recommendations for how best to preserve assets for heirs and maximize tax benefits.
  • Tax plan. Marriage provides certain tax benefits, and divorce removes those benefits. If an individual relied on marital deductions in the past, a tax attorney can advise other ways to mitigate tax obligations.
  • Beneficiary designations. If some jointly held assets were transferred to one spouse as part of the divorce, beneficiary designations associated with those assets should be updated. Failing to do so could leave those assets to individuals who were named at an earlier date.

Estate Planning Before Divorce

Ideally, an individual will update their estate plan prior to separation or divorce proceedings. Updating powers of attorney can help prevent a spouse from making critical financial or medical decisions on behalf of their spouse in the event either becomes incapacitated before the divorce is finalized. For example, North Carolina requires couples to physically separate for one year and one day before filing a complaint for divorce. Spousal rights remain during separation unless other legal steps have been made. This is an important time to review investments, bank accounts, life insurance policies, and retirement accounts to ensure that the beneficiary designations are up-to-date. (Jointly held assets will need to be addressed during divorce.) 

Estate Planning Before Remarriage

Prenuptial agreements are powerful tools for preserving existing and future separate property from potential divorce claims. Remarriages might involve children from previous relationships. How will current and future children be provided for in the event of divorce? Asset division among children can be addressed in a prenuptial agreement, and provisions can be included that prevent spousal claims on assets designated to children.

By Attorney Samantha Reichle
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