Estate planning extends far beyond signing documents that allocate your assets upon your passing. It is a dynamic process that should grow alongside the changes in your life, especially significant milestones like the end of a marriage.
Going through a divorce can be one of the most difficult and emotional transitions that life has to offer. However, as you navigate this complex process, it is crucial to remember that your estate plan has revisions that need your immediate attention. Failing to do so can lead to unintended consequences, such as your former spouse inheriting your assets or making medical decisions on your behalf. But where exactly should you start?
Revisit your beneficiary designations
Like many others, you have likely named your former spouse as a beneficiary in your insurance policies, retirement accounts and other financial instruments. Revisiting the beneficiary designations on these accounts becomes crucial after a divorce. For instance, if you have a 401(k) plan through your employer, you may need to complete a new beneficiary designation form to update your choices.
Tennessee law automatically revokes any disposition or appointment of property to a former spouse after a divorce. However, updating these designations explicitly helps avoid potential complications.
Revise your wills and trusts
You also need to revisit your appointed executors and trustees and adjust the distribution of your assets. If your former spouse held these roles, you may want to designate new individuals you trust to manage your estate. Furthermore, if you have minor children, you may want to name a new guardian in your will, especially if you prefer someone other than your former spouse to assume this role.
Review your powers of attorney and advanced directives
Your powers of attorney and health care directives are crucial documents that allow you to designate someone to make medical and financial decisions on your behalf. After a divorce, you need to update these documents as soon as possible to ensure your former spouse no longer holds the authority to make decisions for you in case of a medical emergency or financial incapacity.
Aligning your plans with your new reality
Revising your estate plan after divorce marks a crucial step in moving forward and securing your future. Although it can be a challenging undertaking after a difficult divorce, this process ensures your current wishes will remain respected no matter what happens.