When a marriage is heading for, or in the process of, a divorce, it typically has a significant impact on everyone involved. The financial ramifications alone can be devastating and last for years to come. That financial fallout can impact your estate plan as well. While no one should go into a marriage assuming it will end in divorce, planning for the possibility of a future divorce is financially wise. You also need to consider the estate planning ramifications of a potential or recent divorce. Toward that end, the Beverly probate attorney at DeBruyckere Law Offices explain how divorce impacts your estate plan.
Planning for the Possibility of Divorce
The negative stigma that was once associated with prenuptial agreements has all but disappeared. In fact, they are now common. A prenuptial agreement is a contract enter into between two parties in contemplation of marriage and that takes effect when the couple are legally married. A prenuptial agreement can cover things such as property division upon divorce, financial responsibilities during marriage, spousal support, and the distribution of estate assets if one spouse dies. A postnuptial agreement effectively accomplishes the same thing as a prenuptial agreement; however, it is entered into after marriage.
Divorce and Your Estate Plan
It can be easy to overlook the impact a divorce on other aspects of your life given the emotional nature of the process. If you are going through a divorce, it is important to know that your estate plan should be reviewed and likely revised during and/or after your divorce. Aspects of your estate plan to consider include:
- The division of assets. Be sure that you are clear on what assets are subject to division in the divorce and what assets are considered separate property. Even inherited property that starts out as separate property in most states can become marital property if it was co-mingled during the marriage. With retirement and pension accounts, the portion of the account that was accumulated during the marriage is usually subject to division in a divorce. To be sure that the assets you end up with are protected in the future be sure to consult with your estate planning attorney.
- Review and revision of estate planning documents. Changing bequests in your Will or provisions in a trust will almost certainly need to be accomplished. Fiduciary roles within your estate plan should also be reviewed and updated accordingly. For example, you may need to amend your Will to appoint a different Executor or amend a trust to appoint a replacement Trustee. If your spouse is your agent in an advanced directive or power of attorney, you will also likely want to revise or revoke these documents.
- Changes to beneficiary designations. Your spouse is probably listed as the beneficiary of your retirement accounts, life insurance, and financial accounts. When you divorce, you should review these accounts and make any desired changes to the listed beneficiaries. Keep in mind, however, that state and/or federal law may prohibit you from removing your spouse as the beneficiary of certain accounts while a divorce is pending so always check with an experienced attorney before making changes. You may also be required, as part of the divorce settlement, to maintain a life insurance policy for your minor children naming your spouse as the beneficiary.
Contact Beverly Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions about how a divorce might impact your estate plan, contact the Beverly estate planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.