Many people review their estate plans before they even finalize their divorces. They worry that if anything were to happen to them, their spouse might receive the majority of their property or intercept the assets they want their children to receive instead.
Whether someone reviews their estate plan in the weeks leading up to a hearing in divorce court or they update their documents months after the end of a marriage, they likely want to eliminate any reference to their spouse. The following are three planning documents that may include references to someone’s spouse/former spouse, and may need to be updated as a result.
A will
It is quite common for individuals to name their spouses as their primary beneficiaries in an estate plan. Therefore, removing a spouse from a will is typically necessary after a divorce. Technically, removing the spouse from a will before the courts finalize the divorce might lead to an unenforceable document. If a will is the primary testamentary instrument someone intends to use, they may need to wait until after the end of their divorce or risk the probate courts invalidating their will because it violates a spouse’s right of inheritance.
A trust
Spouses may have drafted a trust together, which can create a very difficult situation. They may need to dissolve the trust that they created and then establish a new, separate trust on their own behalf. Other times, people can potentially update a revocable trust to remove their spouse from a position of authority as trustee or to eliminate them as one of the beneficiaries who could receive resources from the trust. Sometimes, those with children create trusts specifically because they want to protect an inheritance for their children after a divorce.
Life insurance paperwork
Technically, life insurance documents are on record with the insurance company, not as part of someone’s estate plan. Still, it is typically necessary to update the beneficiary designations filed with a life insurance company if someone no longer wants their spouse to receive the proceeds from their policy if they die. Similarly, if people attached transfer-on-death designations to any of their financial accounts, they may need to file new beneficiary designations with the bank or the company managing their retirement resources to avoid a scenario where their spouse can assume ownership of a financial account after their death.
Removing a spouse both from positions of authority and as a potential beneficiary from all relevant estate planning documents is an important process after a divorce. Estate planning updates can protect someone legally when they are vulnerable and also help protect their legacy after they die.