An important item that often gets overlooked during a divorce is an estate plan re-evaluation or the creation of an estate plan if you don’t currently have one. Many people mistakenly think they do not need an estate plan, because they are not “wealthy”. However, an estate plan is necessary for almost everyone who has any type of assets, regardless of age, marital status, or how much financial wealth a person has.
Estate planning typically encompasses a will, a living will, and sometimes a living trust. Today we will be focusing on the will and living will portion of the estate plan, as these are the most common elements of estate planning.
A will designates how your assets get distributed after your death, and without one the laws of the state you live in will decide who gets what and at what age. A will also names who you would like to handle the administration of your estate, upon your death. This person is called an Executor. The will you create is valid until you revise it (which creates a new will), revoke it, or destroy it.
A living will is different than a will, and deals mainly with healthcare and right-to-die issues if a person is no longer able to make decisions for themselves. In California a living will is also known as “Advance Health Care Directive”. For the most part, a living will can do two things. First, it is a statement of your wishes in regards to the termination of life support and/or the provision of life support. A living will can also designate a person to make health care decisions for you. This is sometimes also referred to as a Medical Power of Attorney or Power of Attorney for health care.
Now that you are familiar with the terms of an estate plan, here are 5 important reasons why you should have an estate plan or revise your estate plan upon a divorce:
Distribute your assets to those of your choosing. Clearly this is one of the biggest reasons people create a will. What may have been an appropriate division of assets when you were married may no longer be, if you are getting divorced. And, you do not want to let the government laws determine who gets your assets!
Accidents happen! If something unfortunate was to happen to you, you obviously would want to ensure that your family is taken care of. Don’t forget to review and update life insurance policies as well, as part of your estate plan review. You may want to change the beneficiaries of your life insurance policy.
Avoid conflicts among family members. Family members fighting over money is quite possibly one of the nastiest legal battles that can occur. There’s always a possibility that someone may not be happy with how you have divided things, but having a will leaves fewer instances of your heirs deciding who gets what. Also, an estate plan leaves more money to your family because there will usually be less legal fees.
Appoint someone you trust to make medical decisions. Similar to the division of assets, who you want to make your medical decisions if you should become incapacitated will probably change after you are divorced so again this is an important part of updating your estate plan. You want to make sure you appoint someone who is willing to carry out your wishes in regards to your health care.
Take inventory of your assets. Having an estate plan essentially forces you to review what you have as far as assets, which can also help you with retirement planning. Proactively planning your estate kind of forces you to think about how to maximize the value of what you have – so that is the indirect tie in with retirement planning.
Our last piece of advice on estate planning is to only use a lawyer that is familiar with estate planning to avoid the risks. Using a lawyer who does practice in the area of estate planning can create serious problems, as can the “Do it yourself” estate planning kits. If you need a recommendation on a capable attorney skilled in estate planning, please do not hesitate to contact us.
Disclaimer – The materials contained in this blog have been prepared for informational purposes only. The information contained is general in nature, and may not apply to particular factual or legal circumstances. In any event, the materials do not constitute legal advice or opinions and should not be relied up on as such.