The divorce process can be long and expensive. However, the work does not end once the divorce decree is signed and the divorce is final. In light of this significant life change, you must rethink your future plans to care for yourself (and any children) and also to ensure proper dispersal of your assets.
Beneficiary Designation On Life Insurance
A life insurance policy is a contract between you and the insurance company. You designate the beneficiary: who will receive the proceeds upon your death. The insurance company pays them when you die.
The beneficiary designation is a legally binding contract. The insurance company pays whoever you have named as your beneficiary. If your ex-spouse is the beneficiary, the insurance company will pay the funds to them. It does not matter to the insurance company if the two of you are now divorced.
Beneficiary Designation On Retirement Plans
State law may automatically revoke a retirement plan designation if the ex-spouse is listed. However, federal law states that the last-named beneficiary is entitled to the funds. Depending upon what type of retirement account you have, the law varies. It is best to change the beneficiary quickly to avoid a potentially lengthy and costly court battle for your family.
If you and your former spouse had a joint trust, you will need to have your own individual trust created. Your new trust will hold the assets that are now in your name only. In this new plan, you will need to think about who to name as the trustee and the beneficiary. If you have minor children, you may also need to consider who will manage those assets on behalf of your children. In many cases, you probably don’t want your ex-spouse in these roles.
If you do not have any estate planning documents in place, now is the perfect time to get everything in order. After going through the divorce, you probably have a good idea of what assets you own and their value. Your knowledge will be beneficial if you discuss estate plans with an attorney. Your estate plan is more than just a trust or beneficiary designations. The essential documents in a solid estate plan include these four legal instruments:
1. Last Will & Testament:
A Last Will & Testament is a legal document that outlines how to distribute your estate and what should happen to any minor-aged children. Without a Will, the court distributes your estate according to North Carolina intestacy laws. Even if you made verbal wishes known while alive, the estate administrator has to follow state intestacy laws instead. The creation of a Will can also simplify the probate process and lower the costs of administration.
2. Durable General Power of Attorney:
A Durable General Power of Attorney gives specific powers to a named person to act on your behalf while you are alive. Powers can include handling financial transactions, making financial gifts, managing insurance policies, selling property, and managing digital assets, to name a few. You can put Powers of Attorney in place immediately, or you can choose to have the Power of Attorney go into effect if you become incompetent and unable to make your own decisions. A Power of Attorney has no effect after you pass away.
3. Health Care Power of Attorney:
A Health Care Power of Attorney allows a named person to make medical decisions on your behalf only if you are unconscious, incompetent, or unable to make decisions on your own. You may want a Health Care Power of Attorney before going into surgery, for example, so the doctors and hospital know who to talk to if needed.
4. Living Will:
A Living Will details a person’s wishes for achieving a natural death, including decisions about life support, artificial nutrition, and what will happen to your body after you die. With your wishes in writing, family members know what you desire are do not have to make tough decisions without your input.
Peoples’ needs vary, but these four legal instruments are the necessities for most of us. Whether you have these documents already or need to have original ones executed, this is a crucial time to review them. Chances are you no longer want your ex-spouse to have authority to sign documents on your behalf or make medical decisions for you.
To avoid confusion by third parties as to who should be acting on your behalf, make sure to call us or contact us online to set up a time to update these essential documents.
Move Forward in Your Life
Divorce can be a long process. Before taking those next steps into your new life, make sure that you cross the finish line with documents that can carry you and your wishes forward. Contact us for help so you can make an informed decision about your needs and execute the estate planning documents that most make sense for you. Depending on your particular situation, you may also need additional documents, such as deeds, trusts, or other custom estate planning tools. Call or contact us at Hopler, Wilms, and Hanna and get started on the rest of your life today.