What Happens to an Estate Plan During Divorce?
If You are Separating from Your Spouse, Be Sure to Update Your Estate Plan
Getting a divorce is no doubt a complicated time, both financially and emotionally. While you have a lot on your plate right now, there is another thing that you need to think about if you and your spouse are parting ways - your estate plan . Here is a look into some best practices in regards to your estate plan pre- and post-divorce:
It is true that until your divorce is finalized, your spouse is considered to be, well, your spouse, in the eyes of the law. This means that if he or she is named as a beneficiary on any of your estate planning documents, then your spouse will inherit any benefits/property if something happens to you before the divorce is settled.
With that in mind, you may want to change your estate planbefore your divorce is finalized. However, before you do so, you should consult with an attorney; in many states, you are not allowed to change beneficiary designations on certain things, such as a life insurance policy, while a divorce is ongoing.
In Texas, all property that is acquired during the course of the marriage is subject to equitable division at the marriage’s end. This means that if you have certain assets that are named in an estate plan, such as a home or bank account, these things will need to be divided in an equitable manner as part of your divorce settlement. You will only be allowed to keep property that is considered separate in the eyes of the law.
After your divorce is finalized, your financial picture may look very different. In fact, you may no longer have a home, or perhaps you acquired full ownership over certain properties. Of course, you no longer are married, which is something that could affect your life insurance policy, who is named as your power of attorney, your will, and more.
Because divorce is a big life change, updating your estate plan post-divorce is strongly recommended. You should update your healthcare proxy, power of attorney, will, and your trust. Keep in mind that if you have a prenuptial agreement, this may affect the ways in which you are legally allowed to update your estate plan.
If you have questions about your estate plan and how it will be affected by your divorce, do not wait until the last second to meet with a professional. At The Powell Law Firm, Attorney John Powell III is board-certified in family law and is also well-versed in estate planning law. Our law firm has more than 20 years of experience and we know how sensitive both divorce and estate planning matters can be. To work with a professional who will always put you first, please call our law firm today to schedule your consultation or send us a message at your convenience.