Creating an estate plan is a crucial step in ensuring that your assets and wishes are protected and respected after your passing.
An estate plan typically includes documents like your will, healthcare directives, trusts, and powers of attorney.
These documents are legal directives that lay out specifics on how your estate should be distributed, who should make decisions on your behalf, and how your loved ones should be cared for.
When a divorce occurs, however, there’s no way around it – it will significantly impact your existing estate plan.
Let’s take a look at why it is essential to update your estate plan after a divorce, how to do so in Georgia, and key considerations to keep in mind during the process.
Why It’s Important to Update Your Estate Plan After Divorce
Divorce can have far-reaching implications, including significant changes to your personal and financial circumstances.
Because of this, failing to update your estate plan after a divorce can lead to unintended consequences, including uncertainty, disputes among family members, and even distributions that run counter to your wishes.
Here are some important reasons why updating your estate plan is crucial after a divorce:
Your assets will likely change. In many cases, divorce alters how your assets are divided between you and your former spouse. Property acquired during the marriage may be subject to division, and this can affect what there is for your beneficiaries to inherit and how your estate is distributed.
Updating your estate plan ensures your assets are accounted for correctly and distributed according to your current wishes.
Your desired beneficiaries may change. After a divorce, you may want to change the beneficiaries listed in your estate plan. If, as is often the case, your former spouse was the primary beneficiary, you may now wish to designate your children, other family members, or charitable organizations instead.
Updating your estate plan ensures that your assets go to the individuals or entities you desire.
You may want to change who gets what. After a divorce, you may want to modify how your assets are distributed as well as to whom. In addition to reconsidering your beneficiaries, you may want to adjust distribution percentages or include specific bequests that reflect your post-divorce intentions.
You may want or need to change who will take care of your kids. If you have minor children, your estate plan likely includes guardianship designations specifying who should care for your children in the event of your death.
After a divorce, you may want to revise these designations to reflect changes in your family structure.
It is essential to ensure that your chosen guardians are still suitable and willing to take on this responsibility.
Your preferred trustees may change. If your estate plan includes trusts, such as a revocable living trust or special needs trust, it is crucial to review and modify them as needed after a divorce.
You may need to change the trustee or modify the terms and conditions of the trust to align with your changed circumstances.
There’s a lot to consider, and the legal ramifications can be quite complicated.
For this reason, it is highly recommended that you talk to an experienced divorce and estate attorney in order to sort everything out.
The Impact of Divorce on Your Georgia Estate Plan
Divorce has a significant – and automatic – impact on your existing estate plan in Georgia due to what is known as the Revocation of Provisions.
Under Georgia law, divorce revokes certain provisions in your estate plan that benefit your former spouse.
For instance, if your will designates your former spouse as a beneficiary, executor, or trustee, those provisions are automatically revoked upon divorce.
In addition, any assets that would have been inherited by your spouse if you had remained married will instead go to someone else – possibly a blood relative of your spouse or your children in common, but never to your spouse’s children if they are not yours, too.
The inheritance situation can become quite complicated because the law treats your spouse as having predeceased you, and this can have some very unintended consequences.
This is yet another reason why you need to thoroughly review and revise your estate plan after divorce to make sure it is sound and in line with your preferences.
It is important to note that the revocation of provisions does not extend to non-probate assets like life insurance policies, retirement accounts, or even bank accounts with designated beneficiaries.
For this reason, updating all these designations is crucial to ensuring all your assets go to their intended beneficiaries.
A trusted estate planning lawyer can help make sure you cover all the necessary bases after a Georgia divorce.
What to Consider When Updating Your Estate Plan After Divorce
You’ll need to review the estate plan you currently have and consider how it should be changed to reflect your new circumstances.
Think about things like where you want your money and property to go, who you want making your care and financial decisions when you cannot, and who should care for your kids, if you have them.
Then, take the following steps to enshrine your directives in law.
Steps to Update Your Estate Plan After Divorce in Georgia
- Review Your Existing Estate Planning Documents: Start by reviewing your current estate planning documents, such as your will, trust(s), powers of attorney, and healthcare directives. Identify provisions that need to be modified or revoked due to the divorce.
- Update Your Will: Revise your will to reflect your post-divorce wishes. Consider changing beneficiaries, executors, and trustees as needed.If in any instance you named your former spouse as the executor or trustee, it is crucial to designate someone else in their place – or to re-designate your ex, if you wish.
- Update Beneficiary Designations: Review and update beneficiary designations on accounts and policies, such as life insurance policies, retirement accounts, bank accounts, and investment accounts.Ensure that your former spouse is no longer listed as a beneficiary unless you intentionally want them to receive those assets.
- Modify Trusts: If your estate plan includes trusts, consult with an attorney to determine if modifications are necessary. You may need to change trustees, adjust distribution provisions, or modify the terms of the trust to align with your current circumstances.
- Revisit Powers of Attorney and Healthcare Directives: Review and update your powers of attorney and healthcare directives to revoke any authority granted to your former spouse.Designate new individuals to act on your behalf for financial and healthcare matters if necessary.
- Consider Tax Implications: Take into account any tax implications resulting from your divorce when updating your estate plan.Consult with an attorney and/or tax professional to ensure your plan complies with current tax laws and maximizes tax efficiency.
- Seek Legal Guidance: Estate planning laws can be complex, and it’s crucial to work with an experienced divorce and estate plan attorney in Georgia.
Common Mistakes to Avoid When Updating Your Estate Plan After a Divorce
It’s essential to approach updating your estate plan after a divorce with care and attention to detail.
Failure to do so can result in unintended consequences and potential legal issues down the line.
To ensure a smooth and effective update to your estate plan, here are some common mistakes to avoid:
- Neglecting to Update Beneficiary Designations: One of the most common mistakes people make is forgetting to update beneficiary designations on various accounts and policies.For instance, retirement accounts, life insurance policies, and payable-on-death (POD) bank accounts often have designated beneficiaries.Failure to update these designations can result in assets going to an ex-spouse or unintended beneficiaries, regardless of changes made in your will or trust. Review and update beneficiary designations to align with your post-divorce wishes.
- Overlooking Digital Assets: In our increasingly digital world, it’s crucial to consider your digital assets when updating your estate plan. Digital assets include online bank and brokerage accounts, cryptocurrency holdings, digital files, websites and even social media accounts.Failure to account for these assets and provide instructions on how to access or distribute them can lead to complications for your loved ones. Make sure to identify and address these digital assets in your updated estate plan.
- Failing to Update Powers of Attorney and Healthcare Directives: Powers of attorney and healthcare directives empower someone else to make important decisions on your behalf if you become incapacitated.Failing to update designations can result in the wrong people having control over critical matters. Review and update powers of attorney and healthcare directives to reflect your current wishes.
- Disregarding Tax Implications: Divorce can have significant tax implications that need to be considered when updating your estate plan. Specific tax laws, estate tax exemptions and capital gains tax rules should inform how you structure your estate plan.Failing to account for these may result in unnecessary tax burdens on your estate. Work with a knowledgeable attorney or tax professional to ensure your updated plan takes tax issues into account.
- Not Revisiting Your Estate Plan Later: Estate planning is an ongoing process, so you’ll need to update your plan at various stages in life. If you remarry or your family changes in significant ways, you will need to revisit and update your estate plan again.Failing to account for new relationships can result in outdated and ineffective estate planning.
- DIY Estate Planning: Estate planning is a complex and specialized area of law. Attempting to update your estate plan on your own without professional guidance can lead to serious mistakes and oversights.Engage the services of an experienced estate planning attorney who can provide personalized advice and ensure your plan meets all legal requirements.
Properly updating your estate plan after a divorce is a critical step in protecting your assets and ensuring your wishes are honored. By seeking expert legal estate planning guidance, you can avoid common mistakes and effectively navigate the process.
Need to Update Your Estate Plan After Divorce? Contact a Georgia Estate Planning Lawyer Today
Speights Law handles both divorce and estate planning, so we are experts at helping people make all the necessary updates and changes.
Talk to one of our expert estate planning attorneys before, during or after your divorce to make sure everything is handled as it should be. Call us at (770) 479-1500 or contact our client coordinator to schedule a time to speak with one of our attorneys right now.
Amanda Speights is a co-founder and lead family law attorney at Speights Law, PC in Cherokee County. She is an experienced family law lawyer who handles an assortment of domestic cases, including divorce, child custody, child support, appeals and other types of litigation in the state of Georgia. To contact Amanda, please visit our contact page.