Estate planning after a divorce is more imperative than ever because divorce not only deranges personal finances, it also often changes heirs and beneficiaries.
Moreover, even though spouses are divorced, as parents they have to make arrangements for their children in the event they die. This means writing or rewriting any trust agreements for the benefit of the children.
Careful consideration of all of the assets of a person is important, and completion of the necessary paperwork to carry out the person’s intent is essential.
Basically, estate planning after a divorce requires the same information spouses used during the happier times of a marriage to do financial planning.
A person on the rebound from a divorce has at hand everything he or she needs to do estate planning – the same financial information used to prepare a property settlement. On the asset side, this includes everything a person owns; on the liability side, it means everything a person owes.
Financing planning in the wake of a divorce inventories both assets and liabilities, so it gives a person a very clear understanding of his or her financial position. Divorce may torpedo the marital estate, years in accumulation, but at least after estate planning a person knows how poor he or she may have become.
When a couple first marries – during the happier times of a marriage – they very often make simple reciprocal wills that are the mirror image of one another. After the marriage crashes, however, they cannot simply rip up their wills and walk away because this leaves them intestate. When a person dies without a last will, his or her property is divided under the laws intestate succession of the state of residence. This can slow the distribution of property to heirs.
In some states, a divorce voids the provisions to a former spouse made in a will; in some states it does not. In Arizona, for example, a statute revokes all beneficiary designations for a spouse upon divorce. However, it is much better to actually change the beneficiaries, rather than to rely on the statute. Even when a person may, for one reason or another, wish to leave property to a former spouse he or she should rewrite his or her will and make a clear statement to this effect.