After your divorce is finalized, you may breathe a great big sigh of relief.
The last thing you will want to think about is hiring MORE lawyers. But if you care about asset preservation, your financial legacy, and your children’s financial well-being in case the unspeakable happens, now is the time to re-write (or write in the first place) your will, a living will, a health care proxy, a power of attorney, potentially a trust. This group of documents is called your Estate Plan.
You may be wondering why you need to think about your estate plan at this moment. Remember, your estate plan is the key to asset preservation in the case of death or incapacity. After you are divorced, you need to take a second look at your documents to update them and to verify that the beneficiaries, executors, guardians and trustees are updated. I am going to take a few minutes just to lay out the basics for you. These points are easy to ignore but for the sake of your family and your well-being, it is important to tend to your Estate Plan now rather than later.
The Estate Plan has various components.
Asset preservation for your family and for your well-being is the other reason a new estate plan is especially necessary after divorce. Your Heath-Care Proxy, Health Directive and Power of Attorney establish who cares for you in case of death. Your wills and trusts is the set of documents that guarantee your choice of care for your dependent children as well as asset preservation for your family.
What You Need In Case Of Incapacity
In case of incapacity, you will need a Health Care Proxy and, Health Directive to designate who makes important decisions regarding your physical care in case you become incapacitated. You will also need a Power of Attorney to designate who has power to make financial decisions on your behalf if you are unable.
Asset preservation is especially important if you are interested in asset preservation over the long-term. With careful planning, your assets can be protected for your family’s future.
After you are divorced you will need to be careful to select someone who is going to make the best decision for you and potentially also for your children. In most cases, a new partner, a sibling, a trusted friend or an adult child is the delegated decider. If you are in the rare situation where you wish for your ex to remain in charge of your financial and medical well-being during incapacity, it is especially important that you re-write your will or trust immediately after divorce. Typically estate plans crafted prior to divorce will cease to be in effect after the divorce is final.
A trust may also serve to protect your assets in case of incapacity.
What You Need In Case of Death
Your Will not only establishes how your assets will be divided, it also determines who will care for your child or children after your death is your Will.
You will designate an “executor(trix)” in your will who has the responsibility of carrying out your wishes in terms of who is the guardian for your children as well to effectuate all the other terms laid out in your carefully crafted legal documents.
You may be reading this thinking, I never had an estate plan in the first place, why do I need this now. After your divorce, asset preservation for the well being of your children’s future can become more important than ever. I’m all for healthfully blended families sharing assets, but If you are not careful your own children could potentially be divested of your hard earned money.
In many states, your estate plan that existed prior to your divorce is no longer valid by operation of law. But just in case, when you create your new estate plan, be sure to check with you estate plan lawyer whether that is the case. Otherwise, it’s likely that your old will can be revoked by stating in your new will that you revoke your old will. You will want to have your new estate plan drafted right after your divorce is final.
Whether asset preservation was a priority to you during your marriage or you are just thinking about it for the first time after your divorce, you may also want to think about obtaining a life insurance policy and trust. There are many kinds of trusts to consider. Often, a revocable trust, meaning a trust that can be changed as long as you’re alive, is often part of an estate plan. Trusts are an important vehicle for asset preservation as they typically allow you to transfer assets to your beneficiaries outside the probate process. Your financial power of attorney gives someone authority to make financial decisions on your behalf.
This is just a little overview, not intended to overwhelm but to give you important information and to advise you to seek counsel from an estate planner near you! Doing this will serve you and your family for years to come.
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DISCLAIMER: The commentary, advice, and opinions from Gabrielle Hartley are for informational purposes only and not for the purpose of providing legal advice or mental health services. You should contact an attorney and/or mental health professional in your state to obtain advice with respect to any particular issue or problem.