Protecting Your Estate
The divorce rate in America has sat steady at just below 50 percent for decades now. From out of the troubling reality that almost every other marriage fails is the issue that comes with the rights that ex-spouses may have on marital assets after the divorce. Your family could end up missing out on assets and an inheritance due to a lack of careful estate planning. In some cases, widowed individuals who survive their spouse discover later that they have limited or no legal right to assets from their deceased spouse’s estate. If you remarry after a divorce or death you will face unique estate planning challenges that others entering their first marriage do not have to deal with.
Retitling and Updating
Following a divorce or the death of a spouse, it is vital that you updated any beneficiary designations and estate planning documents. Even if you update your will, it is important to update beneficiary designations as well. Designated beneficiaries override your will. Not updating beneficiaries on retirement accounts and life insurance policies can mean those funds are left to your former spouse. In the event of a second marriage, updated beneficiary designations and estate planning documents can make all the difference to your new spouse.
Planning for Your Children
While updated documents can help plan for your new spouse, it is also important to take care that your plan properly addresses how assets are to be distributed to any children. Children born during both the new marriage and children from one’s previous marriage may need to be included in your estate plan. Many individuals with children from prior marriages wish to include provisions to provide for their current spouse during their lifetime and direct these assets to go to the children following the death of the survivor. In many instances, these provisions can be laid but only with careful planning.
Divorce can be messy for everyone involved and can have a lasting effect on the lives of those involved. Divorce decrees can in some instances legally require a divorced spouse to keep their former spouse’s name on retirement accounts or life insurance policies as beneficiaries as part of the settlement. These decrees are meant to protect former spouses from losing everything in the divorce. However, in these instances it is possible to unintentionally fail to provide for a new spouse. In some instances, estate planning may even be helpful prior to a divorce being finalized.
Update and Review
Your estate plan is not a “one and done” sort of affair. Regular reviews are required in order to ensure that your loved ones are properly cared for and that your wishes are to be respected. Any life changes, including births, illnesses, deaths, divorces, and remarriages should be addressed.
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