Why Should You Update Your Estate Plan as Part of Your Divorce Process?

A divorce marks a significant and emotional change for a couple and their loved ones. It is common for soon-to-be divorced individuals to focus on the standard legal topics associated with the split, including child custody, child support, alimony, and the division of marital assets.

However, it is also vital for divorcing individuals to consider the impacts the dissolution of their marriage may have on their current estate plan. Your current beneficiary designations and other information may no longer accurately reflect your desires for the distribution of your assets. Most don’t realize, but if the couple is still married at the time of death (no decree of divorce) even if you are living apart or agree to divorce, have filed a petition for divorce or have ever been to divorce court, the surviving spouse is entitled to all rights under the law just as if the couple had been happily married. The spouse is even entitled to make funeral decisions.

By consulting with an experienced Texas estate planning attorney throughout the divorce process, you can ensure your property remains protected, and your current wishes for your assets and medical care are recorded and honored.

How Can a Divorce Affect Your Will?

One of the primary steps individuals should take following a divorce is updating their wills. Texas Estates Code 123.001 stipulates that divorce automatically revokes any provisions in a will that benefit a former spouse unless the will explicitly states otherwise. To ensure that their assets are correctly distributed, divorced spouses should review and revise their wills with the assistance of a knowledgeable attorney to reflect their new circumstances. Failure to update a will correctly could result in unintended beneficiaries inheriting assets and substantial delays in probate, leading to significant legal, financial, and familial complications for your loved ones.

What Happens to Retirement Plans After a Divorce?

You have likely worked hard to build a retirement fund to see you through your golden years after you stop working. However, these carefully planned and funded retirement accounts can be impacted by divorce. In Texas, retirement accounts are considered community property, meaning they are subject to division during divorce proceedings. However, the remainder following this division may still be significant and should be handled with care. Retirement accounts, such as 401(k)s and IRAs, often have designated beneficiaries, and these designations need to be updated post-divorce.

Reviewing and revising retirement plan beneficiary designations is essential to ensure that the intended individuals, such as children or new spouses, are named. Additionally, divorcing individuals should consider the tax implications and potential penalties associated with dividing retirement accounts. With careful planning and legal guidance, you may be able to mitigate these issues and maximize the impact of your legacy.

How Could a Divorce Affect Your Health Care in an Emergency?

A living will, or medical directive, outlines an individual’s wishes regarding medical treatment in the event they become incapacitated and cannot communicate their choices. Often, a person will name their spouse as their healthcare advocate in their living will. If this is the case for your living will, you should think carefully about who could serve in this capacity following your divorce. It’s vital that your chosen representative is aware of their designation and has a thorough understanding of your beliefs and desires regarding difficult end-of-life or emergency care decisions. Your lawyer can guide you through these sometimes challenging considerations and help you craft a clear document that can inform your advocate’s choices, providing both of you with clarity and peace of mind.

How Can Thoughtful Estate Planning During and After a Divorce Secure Your Assets?

Many financial issues must be carefully navigated during a divorce to safeguard your fiscal well-being now and in the future. Many people have set up a durable power of attorney designating another person who can make financial and legal decisions on their behalf under specified circumstances. During a divorce, revoking any existing powers of attorney that name the soon-to-be ex-spouse and appointing new, trusted individuals to these roles is advisable. This step protects your finances and ensures that the person making critical economic decisions for you is aligned with your current wishes and circumstances.

Moreover, estate planning during a divorce should include considerations for any jointly owned assets. Jointly owned properties, bank accounts, and other assets must be addressed in the divorce settlement to determine how they will be divided or managed moving forward. This process often involves negotiating buyouts, refinancing, or selling assets to ensure a fair division. An estate planning attorney can assist in structuring these agreements to minimize tax liabilities and other financial repercussions, ensuring a smooth transition and clear ownership post-divorce.

How Can Our Law Firm Help You?

Regularly reviewing and updating estate plans, especially after significant life events like divorce, is crucial for maintaining financial security and peace of mind. Although managing the myriad details of disentangling your life from your former spouse can feel overwhelming, taking the time to ensure your estate plan is up-to-date is a step that should not be overlooked. Consulting an experienced estate planning attorney during and after a divorce is paramount and can significantly simplify the transition process.

A well-versed estate planning attorney from The Hatchett Law Firm can provide invaluable guidance on updating key estate planning documents, navigating the division of assets, and understanding the legal implications of divorce on your estate plans. We can also help create new estate planning instruments, such as trusts, to protect assets and provide for your children, chosen charities, or other beneficiaries. Given the complexities of Texas estate and divorce laws, professional legal advice ensures that all necessary steps are taken to safeguard your financial future and that of those you love the most. Contact our law firm today at 281-771-0560 to schedule a free case evaluation and learn how we can assist you during this challenging time.