Getting Divorced?  Here’s 4 Documents You Should Update Now

by Jenny Ling, Esq.

Going through a divorce can be an overwhelming experience that changes nearly every part of your life, both personal and financial, and that includes your estate planning.  However, with so much to deal with during the divorce process, many people don’t update their estate plan until it’s too late.

Failing to update your estate plan during and after a divorce can have a number of consequences, many of which you may not have considered.  Don’t rely on your divorce attorney to help you navigate your estate planning needs.  Contact an experienced estate planning attorney who can assist you in making sure you have a plan for the future you want.  You need to update your estate plan not only after your divorce is final, but as soon as you know a split is likely.

Given that the relationship is ending, you likely don’t want your former spouse to be making decisions for you, and you must take action to ensure that doesn’t happen.  While state laws can limit your ability to make certain changes to your estate plan once your divorce has been filed, there are a few important changes you should make as soon as you can see divorce on the horizon.

1.  Update your Powers of Attorney

Washington law automatically revokes any power of attorney your spouse may hold as soon as you file for divorce.  However, it doesn’t name someone new to act on your behalf.

You should ask yourself, “If I am ever incapacitated and can’t make my own decisions, who do I want making decisions on my behalf?”  You need to select someone to make healthcare, financial, and legal decisions on your behalf.  A Durable Power of Attorney and a Health Care Power of Attorney give authority to those you trust to make these decisions for you in the event of incapacity.

Once you think a divorce is possible, don’t wait – contact us immediately to help you get these documents updated. 

2.  Update Your Beneficiary Designations

As soon as you know you are getting divorced, update your beneficiary designations for assets that do not pass through a Will or a Trust, such as bank accounts, life insurance policies, and retirement plans.  Failing to change your beneficiaries can cause serious trouble down the road.

For example, if you get remarried some time down the road but haven’t changed the beneficiary on your 401(k) plan, your former spouse could end up with your retirement account upon your death, cutting out your new spouse and any children that you have with them.  And due to restrictions on changing beneficiary designations once a divorced has been filed, changing the designations immediately is especially critical.

In Washington State, like most states, once either spouse files for divorce with the court, neither party can legally change their beneficiaries without the other’s permission until the divorce is final.  With this in mind, if you are anticipating a divorce, you may want to consider changing your beneficiaries prior to filing divorce papers, and then again post-divorce you can always change them again to match whatever is determined in the divorce settlement.

If your divorce is already filed, consult with us and your divorce attorney to see if you are able to change your beneficiary designations.  If we aren’t able to change the designations right away, that should be priority number one once the divorce is final.

3.  Create a new Will

Don’t wait until your divorce is final to create a new will.  Under Washington law, all provisions in your will made in favor of your former spouse are revoked automatically.  However, this exclusion only takes effect after the divorce is granted.  You should have a new Will as soon as you’ve decided to get divorce, as you may not be able to change your Will once divorce papers have been filed.  And because most married couples name each other as their executor and the beneficiary of their estate, it’s important that you name a new person to fill these roles.  You may have also named relatives of your former spouse as beneficiaries and without updating your will, those provisions will still be in effect.

Even if you have not created a will before your divorce, this is a great time to make one.  If you do have a will, taking the time to go over it with your lawyer and think through its provisions is time extremely well spent. Although state law essentially ignores parts of your will that left money and property to your former spouse, unless you create a will that reflects your new desires, you have no control over how those assets are then distributed. 

4.  Amend your Trust or create a new one

If you have a revocable living trust established, you may want to review and update it.  Like Wills, the laws governing if, when and how you can alter a trust can vary so you should consult as soon as possible if you are considering a divorce.  In addition to reconsidering what assets your soon-to-be former spouse should receive through the trust, you’ll probably want to replace them as successor trustee, if they are so designated.

And if you don’t have a trust in place already, you should seriously consider creating one, especially if you have minor children.  Trusts provide a wide array of powers and benefits unavailable through a Will, and they’re particularly well-suited for blended families.  Given the possibility that you and your former spouse will eventually get remarried, and perhaps have more children, trusts are an essential way to protect and manage the assets you want your children to inherit.

By using a trust, for example, should you die or become incapacitated while your kids are minors, you can name someone of your choosing to serve as successor trustee to manage their money until they reach adulthood, making it impossible for your ex to meddle with their inheritance.

Post-Divorce Planning

During the divorce process, your primary planning goal is limiting your soon-to-be ex’s control over your life and assets should you die or become incapacitated before divorce is final.  In light of this, the individuals to whom you grant powers of attorney, name as trustee, designate to receive your 401(k), or add to your plan in any other way while the divorce is ongoing are often just temporary.

Once your divorce is final and your marital property has been divided up, you should revisit all of your planning documents and update them based on your new asset profile and living situation.  From there, your plan should continually evolve as your life changes, especially following major life events, such as getting remarried, having additional children, and when close family members pass away.

Make a plan for the life you want

Going through a divorce is never easy, but it’s essential that you make the time to update your estate plan during this trying time.  Contact Us to review your plan immediately upon realizing that divorce is inevitable and then schedule a follow-up visit once your divorce is finalized.

Jenny Ling is a partner at the Law Offices of Jenny Ling, PLLC.  She focuses her practices on estate planning, business succession planning, business and bankruptcy.