Rebuilding Your Legacy: Updating Your Estate Plan During and After a Divorce

Written collaboratively by Estate Planning Attorney?Leslie Sultan, Esq.

Are you (or someone you love) going through a divorce? Don’t forget to think about your estate plan along the way. This article will cover a few steps to ensure that your assets go to your children and your loved ones (and not your Ex!).

Although there are some things you may be able to do on your own, it is always best to talk to an experienced professional who can help you make a holistic plan that fits your particular needs.

The divorce process is really one of unraveling your financial life from your spouse’s – including your estate assets. Have you named your spouse as your beneficiary in your will? What about your retirement plan(s) and/or life insurance?

Perhaps you and your spouse made decisions about the guardianship of your minor children should something happen to you. All of these decisions will have to be reviewed again.

Understanding Spousal Rights in New York: Making Beneficiary Changes during a Divorce

Before we discuss how to change an existing estate plan, we want to reiterate that if you’ve never written a will, the State in which you reside will have an “intestate” plan for how your assets will be distributed.

If you are divorcing but technically still married, your spouse will have inheritance rights to some or all of your assets – something most people in a divorce do not want to hear. So it's important you speak with an estate planning attorney right away if you are thinking about or have started a divorce.

Your Settlement Agreement Needs to Address Your Estate Plan

Almost all couples negotiate their divorces, either through mediation or with the help of lawyers. The end result is a Settlement Agreement. (Very few divorces actually go to trial.) Be sure your Settlement Agreement addresses the following:

1.?Your will. You and your spouse will most likely give up the right to inherit from each other and give up the right to be each other’s executor. Once this is done in writing, you should evaluate your will, and testamentary or living trusts

2. What about?guardianship of minor children? If you die while your children are minors, the children’s other parent automatically gets custody of them (unless he or she is determined by the court to be unfit). But you and your ex might want to agree on who the alternate guardian will be – or who it won’t be!

3.?Retirement plan beneficiary designations. Some assets, such as retirement plans, have beneficiary options that allow the money to pass automatically to the named beneficiary (and thus, they do not require probate after you pass away).

You, as the owner, tell the company holding the asset who will receive the benefit (funds) after you die. You and your spouse will probably waive these rights, too, in your Settlement Agreement. (Note: this is different from giving your spouse part of the retirement account pursuant to the divorce.) It is certainly something to discuss.

4.?Life Insurance beneficiary designations. Life insurance beneficiary designations work the same way as retirement plans – that is, they allow the money to pass automatically to the named beneficiary without passing through probate.

When divorce attorneys or mediators work with couples on their settlement agreement, they often decide to maintain enough life insurance to honor the child support provisions of the agreement, in case the parent paying child support dies.

This is especially important if the couple has young children. People generally want the choice to decide if they either want to leave the children’s other parent as the beneficiary or want the freedom to name the children as the beneficiary(ies). (This can be done either directly or in trust).

There are a few documents that you don’t need to address in your Settlement Agreement – you can change them without your spouse’s consent:

5. Don’t forget to update your?Health Care Proxy, Living Will, and Power of Attorney?forms also. Most likely you don’t want your soon-to-be-Ex to have access to your bank accounts or make medical decisions for you in the event you become incapacitated.

Now is the time to designate new trusted individuals who will make medical and financial decisions on your behalf, ensuring your wishes are respected, your loved ones are protected, and your interests are safeguarded.

Once your Settlement Agreement is signed or you’ve received a Judgment of Divorce (if there is no settlement), it’s time to get to work! This is the time to actually MAKE all of these changes – to update all of your estate planning documents. Taking prompt action can prevent your former spouse from trying to inherit assets you intended for others.

Navigating estate planning during divorce requires a nuanced understanding of legal and financial implications. Speaking to financial and legal professionals with expertise in divorce and estate planning will help you navigate the legal landscape, ensure compliance with the laws in your state, and develop a comprehensive estate plan that aligns with your new circumstances.

Estate planning during a divorce in New York is a critical step to safeguard your financial future and protect your loved ones. By reassessing your estate plan, updating beneficiary designations, understanding spousal rights, and seeking professional guidance, you can navigate the complexities of divorce while securing your assets and ensuring your wishes are honored.

If you do not revise your estate plan during and/or after your divorce, your ex-spouse may end up inheriting money and property from you, or worse, maybe granted legal authority to make life and health care decisions for you if you become incapacitated. Take proactive steps to protect your interests and consult with a trusted estate planning attorney to create a robust plan that provides peace of mind during this transformative phase of life.

For more information about estate planning, feel free to reach out to?Leslie Sultan, Esq.?Of course, I’d be happy to help you mediate your divorce settlement agreement.