Divorce is a significant life change, and it can profoundly impact your financial and personal life, even if you and your spouse parted ways on amicable terms. Almost every aspect of your life will change, including your estate plan.
With your spouse no longer in the picture, your priorities will change, and you will need to review your estate plan. As leading Utah estate planning attorneys, we recommend doing this immediately after the divorce so that your assets and healthcare directives reflect your new circumstances.
Here are a few estate planning tips that’ll help you.
1. Update Your Will
In Utah, a divorce will automatically revoke your spouse as a beneficiary from your Will. However, it’s best to formally revoke the old Will and create a new one to avoid confusion or legal challenges. For instance, if you had assigned your spouse as an executor in your old Will, you would want to change this to protect your financial interests.
Creating a new Will helps you:
- Reassign your assets to new beneficiaries.
- Name a new executor for your Will.
- Ensure your wishes get documented.
- Choose new guardians for your children (if required).
You should physically destroy the old Will and all its copies by shredding, burning or tearing when you revoke it. Simply updating your existing Will may not be enough, because it might lead to legal disputes. Working with an estate planning attorney in Utah can help you create a new Will that’s legally sound.
2. Change Your Account Beneficiaries and Powers of Attorney
The next step in estate planning after a divorce involves naming new beneficiaries for your assets, such as retirement accounts (IRAs and 401Ks), pay-on-death accounts, and investment accounts. These beneficiaries are typically excluded from your Will. If your ex-spouse is still a beneficiary, they may end up receiving these benefits despite your divorce.
Likewise, you’ll need to update your Powers of Attorney. A Power of Attorney gives someone the authority to manage your finances and make legal decisions on your behalf. If your ex still has your power of attorney, they can literally control your finances and personal wishes. Your post-divorce financial planning must include assigning this responsibility to a trusted friend or family member other than your ex.
3. Review Your Healthcare Directives
Like most couples, you might have added your spouse as your healthcare proxy to make medical decisions on your behalf when you are unable to do so. These directives may also outline your wishes for end-of-life care.
Updating your healthcare directives can simplify your estate planning after a divorce. However, when choosing a new healthcare proxy, pick someone you trust.
Also, be sure they:
- Understand your medical wishes.
- Can carry out your end-of-life care preferences.
- Have access to your medical records if needed.
A skilled estate planning attorney in Utah can help you draft and formalize your healthcare directives according to your wishes. Once your document is ready, make sure your healthcare providers get a copy.
4. Update or Set Up a Trust
Setting up a Trust, particularly a Revocable Trust, is an effective way to manage your assets and debts. A Revocable Trust provides more control over how and when your assets get distributed, which is an added advantage if you have minor children.
A revocable living trust can help you:
- Avoid probate.
- Protect assets from creditors.
- Manage and distribute assets efficiently.
- Name a trustee who can handle your trust for your beneficiaries.
- Appoint guardians for your children.
- Add or remove beneficiaries, assets, and trustees during your life.
If you already have a Revocable Trust, update it and remove your ex as a beneficiary. You can also name a trusted friend or family member as your children’s guardian if you don’t want your ex to shoulder this responsibility.
However, if you and your spouse have a joint Trust, you might have to divide it after the divorce. Once your divorce is finalized, you can create a new Trust that aligns with your post-divorce financial planning.
Setting up a Trust is a lot more complicated than writing your Will. We recommend consulting a competent estate planning attorney in Utah. Your lawyer can help you set up a Trust that best suits your financial goals.
5. Review Your Life Insurance Obligations
After a divorce, review your life insurance policies to check who gets the benefits after your death. Unless you make the changes, your spouse will receive the payout upon your death if they are the beneficiary. Update the policy to reflect your current wishes, and consider how the proceeds will support your children or other beneficiaries.
Another step in your post-divorce financial planning is to review your cut-mandated life insurance coverage. In Utah, the judge may order you to provide life cover for your ex and children after the divorce.
After your death, the payout will cover the alimony owed to your ex and provide financial support for your children. Be sure to check how long you are supposed to maintain this life insurance.
The Bottom Line
Handling a divorce is never easy. But knowing how to manage your estate planning after a divorce can help you move on. Whether revoking your Will or modifying your Trust, you must ensure your estate plan aligns with your new life. Making these changes as quickly as possible helps protect your loved ones.
Updating your post-divorce financial planning is easier said than done, but you don’t have to do it alone. Our seasoned Utah estate planning attorneys can help you create a plan that secures your legacy. Get in touch now to update or create your new estate plan!