Estate Planning Guidelines for Divorce
When you are facing divorce, estate planning is an important part of that. In a perfect world, a divorcing couple will be able to come to some agreements on guardians and other topics involving the kids. If not, parents should still create their own estate plans to reflect their wishes.
There are a myriad of estate planning goals a divorcing or divorced person might have: to name people you know and trust to make important decisions for you if you are not able to do so; to protect your assets from being lost to remarriage of either party; to protect your assets from being lost to creditors of your ex-spouse or other factors you have no control over; to name guardians in the event both ex-spouses are incapacitated or die; to ensure that if one parent dies or is incapacitated, that person’s family still has visitation with the children.
What follows is a simple guide to what estate planning steps to take before, during, and after a divorce.
Before Filing for Divorce
The best thing you can do before filing for divorce is to meet with your own divorce attorney and learn about what divorce will look like for you financially and with regard to custody when you divorce. This is also the time to set up a bank account in your own name if you do not already have one. You may need several months of living expenses if you have an uncooperative spouse. You can move assets around before you file for divorce, but never do this without getting advice from your divorce attorney first. When I raise the issue of moving assets, I only mean to suggest it as a way for you to have access to funds you need. I do not suggest moving money to try to prevent your spouse from meeting their needs. Judges do not look fondly on parties who move assets in bad faith. You might stick it to your spouse now, but you risk facing consequences later down the road. And as someone who has been through a divorce, I can tell you that you will regret the times during divorce where you did not operate according to your values. Take your anger with you to therapy, not into your dealings with your ex-spouse.
If you have an estate plan in place that names your spouse, you may want to make some changes to that prior to filing for divorce. You may want to amend your trust to remove your spouse as a current trustee and as a beneficiary after your death, as well as amend your will to remove your spouse as a personal representative and beneficiary. You may want to execute a new Advance Directive and Power of Attorney to remove your spouse as a decision-maker in the event of your incapacity.
During Your Divorce
Once you file for divorce, you cannot make significant changes to assets without a court’s approval. So again, make sure that you have access to the assets you need before you file.
It may be a good idea to discuss naming guardians for the kids as part of the divorce process. If you can mediate to agree on this, it will be better for all involved.
Another topic that comes up during divorce proceedings when you have minor children is life insurance. Many divorce decrees require that parties maintain life insurance and name the other parent as the beneficiary. You may want to change this standard so that you can name your trust as the beneficiary instead, so that the proceeds benefit your child directly and cannot be lost to creditors or other issues your ex-spouse may have.
If you have not completed the estate planning steps suggested before filing for divorce, you are somewhat limited in what you can do now. You can amend your trust to remove your spouse as a current trustee and as a beneficiary after your death, as well as amend your will to remove your spouse as a personal representative and beneficiary. You can still execute a new Advance Directive and Power of Attorney to remove your spouse as a decision-maker in the event of your incapacity. But you cannot move any assets into your trust until after the divorce is finalized.
After your divorce is finalized, you will then have a decree that tells you who gets what assets, and you may then take steps to move assets into your own name, or into your trust. You no longer have any restrictions on what you can do with your assets.
If you have not completed the estate planning steps suggested before filing or during divorce, you now need to act to change your plan. You must amend your trust to remove your spouse as a current trustee and as a beneficiary after your death, as well as amend your will to remove your spouse as a personal representative and beneficiary. You must execute a new Advance Directive and Power of Attorney to remove your spouse as a decision-maker in the event of your incapacity.
With all of this in mind, the best thing you can do is to meet with both a divorce attorney and an estate planning attorney before you file for divorce. Sometimes life does not happen in the best way possible, though, and the important thing is that wherever you are in the divorce process, you act now to protect yourself and your kids.
If you want to get started, read about our estate planning services and schedule an appointment.
To your family's health + happiness,
Candice N. Aiston
P.S. Want to get started slowly but surely, naming guardians for your kids? Check out our Guardian Plan kit.
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Candice N. Aiston is an Legal Planning Attorney for Estates + Businesses in the Portland, Oregon area. She helps people to prepare for a lifetime of security, prosperity, and guidance. If you would like to receive her free reports, please visit http://aistonlaw.com/ to sign up. Follow her Facebook page for daily planning tips: https://www.facebook.com/aistonlaw/.