It is important to revise and update an estate plan after major life events, and a divorce is one of them. New York residents should give a copy of the divorce agreement to the attorney who is assisting with the estate plan because they may still have certain obligations to an ex-spouse.
One of those obligations is maintaining a life insurance policy. Along with beneficiary designations, this is a commonly-overlooked element of revising an estate plan after a divorce. Failing to follow the divorce agreement regarding life insurance benefits for an ex-spouse can result in litigation. Beneficiary designations are also often overlooked after a divorce. This can mean ex-spouses may be accidentally left as beneficiaries on retirement accounts and other assets.
People may want to change their choice of health care proxy and financial power of attorney if the person chosen for those roles was the spouse. They may also have named the spouse as executor under their will. Wills and trusts may need to be revised. If there are minor children and a parent dies, the other parent will most likely get custody although it is possible to name another guardian in the will and leave money for the litigation that may follow. Parents may also want to set up a trust for minor children so the ex-spouse does not control their funds.
Estate plans should also be reviewed after changes in tax laws or other major life events. Even if there are no births, deaths, marriages or other significant changes in the family, people should still look over the documents every few years. A person’s assets, relationship with family members or wishes about what will become of assets may have changed. A person may decide that a trust would be a better way to manage the distribution of assets to heirs than a will.