So, you’ve finalized your divorce. What do you do now?
First, verify the terms of the Decree of Divorce do not restrict your ability to modify your estate plan, beneficiaries on life insurance, etc. Once you’ve verified and there are no restrictions, what do you do now?
Second, make a list of all of your assets that have beneficiary options- bank accounts, 401k accounts, IRA, pension, retirement, life insurance, etc. Gather the contact information for each company and start going down the list to change the beneficiary.
Third, find an estate planning attorney in your area to meet with to discuss your estate planning needs. This would include possible documents such as a Power of Attorney, a Health Care Directive, a Last Will and Testimony and/or a Trust.
The Power of Attorney is a document that allows someone to act on your behalf when you are unable to make financial decisions for yourself. This may include managing money, communicating with a mortgage company, meeting with financial advisors, dealing with your retirement, etc. A Power of Attorney becomes invalid at the time of your death.
The Health Care Directive is similar to a Power of Attorney, but it deals with medical decision making when you are unable to make decisions for yourself. The Health Care Directive allows the person to select different options related to medical issues that may arise, including lifesaving efforts, unconsciousness or coma conditions, etc. As with the Power of Attorney, it becomes invalid at the time of death.
A Last Will and Testament is a document to provide instructions to the probate court regarding the distribution of your assets and the beneficiaries who are to receive each asset. The Last Will can be specific or general. This document will most often require probate in court to be accomplished. Your beneficiaries will most likely take your estate to court, and if an attorney is used, the attorney will be paid most often based upon the value of the estate. A Last Will and Testament only deals with your estate after you have passed.
A Revocable or Family Trust is similar to a Last Will and Testament in that it will help distribute your estate after you pass away. The difference is that your beneficiaries do not have to open probate once you die. The Trust can handle the estate most often without any court involvement. The assets can be transferred by the Trustee through the trust administration process.