Divorce is a life-changing event that alters your personal and financial landscape. After the paperwork is finalized, there are a myriad of things that need to be considered and updated.
If you are making a list, be sure to add “update estate plan.” Here’s why.
The impacts of divorce on your estate plan
When you initially created your estate plan, it’s likely you included your spouse in many key roles, such as:
- Beneficiary
- Executor
- Power of attorney
- Healthcare proxy
It’s important to remember that these are legally binding documents, and in Illinois, the designations don’t automatically change, even if your divorce decree says otherwise.
Given these potential complications, here are some key areas to consider:
- Review and revise your will and any trusts to ensure your assets are distributed according to your new wishes. You might want to remove your ex-spouse as a beneficiary or trustee.
- Life insurance policies, retirement accounts, and other investments usually require beneficiary designations, so it’s essential to update them.
- If your ex-spouse is your financial or health care power of attorney, you’ll likely want to designate someone else to make crucial decisions on your behalf if you become incapacitated.
- If you have minor children, carefully consider who should be their legal guardians should anything happen to you.
In addition to divorce, there are other times throughout your life when you should consider updating your estate plan, including:
- Remarriage
- The addition of more children
- A significant change in assets
- Purchasing or selling a business
- When laws change
It’s important to remember that your estate plan is a living document that should always reflect your current situation and wishes. By keeping it updated, you ensure that your wishes are respected, your assets are protected and your loved ones are taken care of.