Couples who divorce have stressful decisions on meeting their financial needs and still provide for their children’s. Divorcing couples are often more worried about how to fulfill immediate financial obligations than they are about preserving their estate-planning goals.
In California, a divorce will revoke any provisions in a will to a former spouse but will not affect bequests made to children of relatives of the ex-spouse. However, if one spouse becomes disabled or dies before the divorce, the other spouse may be able to claim the estate. For Riverside County residents, having knowledgeable legal counsel can help you to protect your interests.
How divorce impacts an estate plan
Divorcing your partner will likely alter the terms of your estate and future healthcare plans. It may be wise to take a look at your important estate documents. Beneficiary designations in a revocable trust, for example, or an irrevocable life insurance trust are still valid if one spouse dies before the divorce is final.
Divorce may require changes to power of attorney (POA) designations. A POA grants an agent, often a spouse, authority to make important financial or healthcare decisions for another person. Until the divorce is final, one spouse can continue to act as the other’s agent, even after separation. And, if the POA designated the spouse as guardian, the divorce filing will not revoke that.
Living wills and annuities
It also makes sense to change a spousal designation in a living will or advanced directive. An ex-spouse may not be your first choice to make decisions on your behalf if you become incapacitated. Making these changes during the divorce will prevent this.
Although beneficiary designations on annuities or pensions are often ineffective if they were revocable at the time of death, if there is a designation on the property settlement agreement that states that it will be in effect after divorce, the ex-spouse will remain a beneficiary.
To cover all bases, it may be wise to draw up new documents altogether and be sure to change all beneficiary designations, whether they are for life insurance policies, retirement or brokerage accounts, or a will or trust.