They say over 50 percent of marriages end in divorce. And while any divorce situation is traumatic for those involved, it is important to make sure anyone going through a divorce focus on both legal and financial issues they need to take care of after the final divorce papers are signed.
For example, you should always review your estate planning documents to determine who the successor trustees are, personal representative, the agent under the General Durable Power of Attorney (for financial decisions), and your patient advocate (for healthcare decisions). Typically, your former spouse is the person who was appointed, but now that isn’t practical. This should be revised to someone you feel comfortable with who will act in your best interest. It is also necessary to have several alternates in the event the first person you appointed is not able to act or passes away.
In addition, you should review how your investments and financial accounts are owned. Pursuant to a divorce the assets are split among the parties. Therefore, you should make certain that your assets have been properly split and if you have a Trust that those assets are owned by the Trust.
With regard to life insurance it will be necessary for you remove your former spouse and name another beneficiary. If you have a Trust I recommend your Trust be the named beneficiary. If you have retirement accounts, IRAs, 401(k)s, and annuities, these also have beneficiaries you should change. As with life insurance, you will want to revise who has been appointed as the beneficiary. In certain cases you may name individuals or if you do have a Trust, you may appoint the Trust. You should speak with an estate planning attorney to determine what the best method is in your circumstances.
If you have a retirement plan through work, you should immediately revise the beneficiary after a divorce is finalized so that the former spouse does not receive the retirement assets upon your death. There have been cases that have allowed the former spouse to receive retirement benefits after a divorce if the participant does not change the beneficiary.
Whether you are going through a divorce or were recently divorced, or know someone who is in this situation, make sure you protect yourself and your financial situation by making these few changes.