You haven't reviewed your estate plan since your divorce
Divorce can be a traumatic experience, and for people going through it, long-term financial and estate planning may be the furthest things from their mind. But if you're divorced, it's a good idea to review your estate plan as soon as possible.
The divorce settlement likely took care of issues such as jointly owned real estate. bank accounts or other property. You may have even amended your will or living trust. But what about life insurance policies and retirement accounts, such as IRAs or 401 (k)s? Is your former spouse still named as a beneficiary? If so, you should update the beneficiary designations for those accounts.
Did you previously appoint your spouse as your agent for health care issues or give him or her a power of attorney for financial matters? Perhaps your divorce was amicable and you're comfortable with this arrangement. Will you still be comfortable if your ex remarries and has children with someone else? To avoid unpleasant surprises, consider terminating any agency relationships with your ex-spouse and appointing someone else to handle health and financial decisions on your behalf in the event you become incapacitated.
Have you established any irrevocable trusts that name your former spouse as a beneficiary? If so. do the trust instruments provide that his or her rights to the trust terminate automatically in the event of divorce? If not. the disposition of the trust assets may depend on several factors, including the nature of the trust, applicable state law and the terms of your divorce settlement.
These are just a few of the many significant estate planning issues you should address after a divorce. In fact, you should revisit your estate plan any time there's a major change in your life. including divorce, death of a family member, marriage or the birth of a child. Failure to do so can lead to unexpected – and sometimes unpleasant – consequences.
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