If you are going through a divorce, estate planning is probably the last thing on your mind. If you have any measurable assets, life insurance policies, or retirement accounts and other such assets and you are getting divorced, you will need to take steps to update your estate plan, and the sooner the better.
If you leave your estate plan alone, then if you suddenly passed away, a significant portion of your assets could be distributed in a way that you wouldn't have wanted, and they could wind up in the hands of your ex-spouse, especially if a large portion of your wealth is tied up in beneficiary designations.
Revoke Your Will
One of the first steps is to revoke your old will and make a new one, the same goes for an outdated trust. If you wrote a will while you were married, there is a good chance that you left everything to your spouse, which is probably not what you would do now.
While Ca. Probate Code § 6122 states that a divorce revokes bequests made through a will to a former spouse, the rest of a will is not affected. Since state laws are subject to change, it is better to start fresh with a new will where you can name new beneficiaries and alternate beneficiaries.
California law does not take effect until the divorce is finalized, so if you are in the divorce process, your spouse would still receive any bequests.
Importance of Updating Your Beneficiary Designations
A large percentage of people's wealth is controlled by beneficiary designations, and certain types of assets pass outside of a will and directly to beneficiaries. If you named your spouse as your beneficiary on your life insurance policy, or on your retirement accounts such as IRAs or 401(k)s, or if your spouse is the beneficiary on your payable-on-death bank accounts, then you likely want those changed swiftly.
Don't assume that state law or your divorce decree would revoke any earlier beneficiary designations. Even if you divorce and remarry, if you do not remove your former spouse as your beneficiary and you were to die, your ex-spouse still receives the proceeds – not your new spouse or any children.
If you have established powers of attorney (one for healthcare and one for financial decisions), and you gave your former spouse the authority to act on your behalf, you will want to revoke them and prepare new documents.
These are all important things to consider when filing for divorce. If you would like more information, or if you are seeking a divorce, contact Cutter & Lax, Attorneys at Law to schedule an appointment with one of our experienced divorce lawyers!