Taking a moment to review beneficiary designations, wills and other estate planning documents can help to better ensure assets are passed to intended beneficiaries.
Getting a divorce is a life changing event. It marks both the end of a personal and financial relationship. As a result, it is wise for those going through or recently completing a divorce to take a moment to update their estate plans. These four steps can help better ensure an estate plan is updated:
- Beneficiary designations. A beneficiary designation is intended to ease the transfer of an asset to an intended beneficiary. These designations will need to be updated if a former spouse was listed. A final divorce decree is generally not sufficient to change these documents. Beneficiary designations are used in a variety of documents, including life insurance policies, certain savings accounts, annuities and retirement accounts.
- Wills. Florida state law allows for the administration of a will as if the former spouse had died at the time of the divorce. This means the divorce effectively removes the ex from the will. Although this individual may not receive assets as once stated in the will, the assets may not be distributed as desired. For example, if the will does not specifically state who should receive assets if the spouse is no longer a beneficiary, the assets will likely be distributed as if there was no will at all. As a result, it is wise to review this document and make adjustments as needed.
- Health care directives. State law works in a similar manner for health care directives. It revokes designation of a spouse as a surrogate, or person able to make health care decisions on the behalf of the creator in the event of incapacity, in the event of divorce. Although the former spouse is no longer able to make these decisions, it is wise to review the document to either list an alternate surrogate or ensure another is already included.
- Retirement. In some cases a qualified domestic relations order, or QDRO, may be required. A divorce decree ordering the split may not be sufficient. A QDRO is a court order that outlines the distribution of retirement benefits between ex-spouses.
These are just a few of the documents that will likely need review and updating directly following a divorce. A failure to update these documents could result in the passage of assets to an unintended beneficiary.
Importance of legal counsel
In addition to these estate planning documents, a divorce can also have a range of tax implications. As a result, those who recently separated from a spouse are wise to contact an experienced estate planning lawyer. This legal professional can review and update these documents and better ensure that your wishes are met.
Keywords: divorce estate plan