An estate plan allows you to designate in advance how you want your assets distributed following your death. Your will and any beneficiary designations are part of an estate plan; therefore, it's important to update each of these legal documents if you are considering divorce. Otherwise, your soon-to-be ex-spouse may still have a legal right to some or all of your assets if you die before the court grants your divorce:
How Estate Planning Works
Estate planning is a process that arranges for the distribution of your property when you die. You don't have to be wealthy to have an estate. Everything you own—your home, vehicles, life insurance policies, banking accounts, and any investments, including retirement accounts, certificates of deposit, and annuities—are part of the estate you leave behind. Some, but not all, of your assets may be subject to probate administration, or the legal process for distributing your assets after your death.
Why You Should Amend or Revoke Your Existing Will
State laws vary, but in many states, requests that you make to your spouse in a will are automatically revoked if you get divorced. However, that may not happen until the court grants your final divorce decree. Until a judge signs the decree, the law considers you married.
Therefore, if your current will leaves everything to your spouse, you need to revoke it and draft a new will before you petition for divorce. If you die while you are in the process of getting divorced and you haven't changed your will, your spouse can still inherit.
What Can Happen If You Fail to Update Your Beneficiary Designations
Since not all your assets pass to your heirs in your probate estate, you also need to update the beneficiary designations on any life insurance policies, IRAs, and 401(k) retirement accounts that you own. Since beneficiary designations allow the person whom you name as a beneficiary to inherit these assets upon your death, you need to make the necessary changes once you plan to file for divorce.
Unfortunately, during the stress of divorce, you may not remember beneficiary designation forms you signed years earlier—particularly employee beneficiary designations. But under federal law, certain qualified retirement plans, pensions, and employer-sponsored life insurance policies require that the assets go to the individual named on the beneficiary designation document. This applies, even if the law in your state revokes the designation of an ex-spouse you named as beneficiary.
It's important to update all your legal documents whenever a major change, including legal separation or divorce, occurs in your life. Check out a website like http://www.davis2.com/ for more information and assistance.
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