How to Update your Estate Plan After Divorce

Divorce can be a life-changing event for all involved. It has emotional, financial, and practical implications. You may overlook the need to update an estate plan after a divorce, which can have unintended consequences. It is important to update your estate plan after a divorce in order to accurately reflect your new circumstances and wishes. With that in mind, the Indianapolis attorneys at Frank & Kraft explain how to update your estate plan when you get divorced.

Steps to Take to Update Your Estate Plan After a Divorce

For most people, divorce is a life-changing event, and those changes need to be reflected in your estate plan to ensure that your plan works as intended. Common steps that you may need to take to update your estate plan following a divorce include:

1. Revoke and Replace Your Last Will and Testament or Trust Agreement. If you have named your ex-spouse as a primary beneficiary, executor, or trustee in your will or trust, it is likely that you want to change this designation. You should also review and update any guardianship designations for minor children if applicable. You should also review and update any guardianship designations for minor children if applicable.
2. Update Beneficiary Designations. Certain assets, such as life insurance policies, retirement accounts (like IRAs and 401(k)s), and payable-on-death (POD) bank accounts, pass directly to the named beneficiary regardless of what your Will states. It is important to update beneficiary designations after a divorce to remove your former spouse if you so desire. If you fail to update these beneficiary designations, your ex-spouse could inherit these assets even if you have updated your Will. You may instead choose to name a different beneficiary, such as a child or another member of your family. Note: The terms of your divorce may require you to continue to carry life insurance naming your former spouse as the beneficiary.
3. Revisit Trusts. If you have established a trust as part of your estate plan, you will need to review and potentially update it after your divorce. This includes changing the trustee, beneficiaries, or any specific instructions involving your ex-spouse. You may want to appoint someone else as Trustee if your ex-spouse has significant control over trust assets or is a Cotrustee. In some cases, you may need to dissolve the existing trust and create a new one that better suits your post-divorce circumstances.
4. Consider Updating Your Power of Attorney and Living Will. Your Power of Attorney (POA) and Living Will are critical components of your estate plan that determine who will make decisions on your behalf if you become incapacitated. If your ex-spouse has been named as your POA, or healthcare agent you may want to appoint another person. This change is particularly important because the person you name in these documents will have significant authority over financial and medical decisions.
5. Review and Amend Your Property Agreements. Divorce can involve dividing marital assets, which may have an impact on your estate plan. After the divorce you will need update your estate plan in order to reflect any changes to property ownership. For example, if you and your ex-spouse owned a home together, you might need to amend the title or ownership documents to ensure they accurately reflect your new situation.
6. Take Stock of Your Assets and Liabilities. Divorce can significantly alter your financial landscape, making it important to reassess your assets and liabilities. You may need an updated asset inventory. This is a list that includes everything you own and owe. Seek professional guidance.
7. Updating an estate plan following a divorce is a complex process, especially if there are significant assets, children under 18, or a blended family. For more information, join us at an upcoming FREE seminar. Call Frank & Kraft

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(317) 684-500 for an appointment if you are going through a recent divorce or are in the process of one. Mr. Kraft’s primary areas of expertise are estate planning, Medicaid planning, federal, state, and corporate taxation, as well as real estate and corporate law. He also has a background in accounting. Latest Posts by Paul A. Kraft Estate Planning Attorney (see all)

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