Going through a divorce is not only emotionally challenging but also creates significant changes in one’s legal and financial affairs. One critical area that often gets overlooked during this tumultuous time is estate planning. For residents of Colorado, understanding how a divorce can alter your estate plan is crucial for protecting your interests and ensuring your wishes are honored.
At Evans Case, we specialize in guiding clients through the complex intersections of family law and estate planning. In this post, we will explore several key areas that you should consider updating in your estate plan if you are experiencing or have recently finalized a divorce.
Revising Your Will
Your will is perhaps the most vital document to update after a divorce. In Colorado, if you don’t amend your will post-divorce, the law generally interprets it as if your ex-spouse had predeceased you. This means they would not inherit anything under the will. However, it’s best to actively update your will to reflect your new status and intentions, especially concerning guardianship of minor children and distribution of personal assets.
It’s also an opportune time to review beneficiaries for all elements of your estate, including those not typically covered in a will, such as retirement accounts and life insurance policies. Ensuring these are current can prevent unintended consequences and make certain your assets are distributed according to your wishes.
Power of Attorney and Healthcare Directives
Divorce also impacts your choices in power of attorney and healthcare directives. If your ex-spouse is named in these documents, revisiting them is necessary. You’ll want to appoint someone you trust to manage your financial affairs and make healthcare decisions on your behalf if you become incapacitated. In Colorado, any existing power of attorney or healthcare directive naming your spouse is automatically revoked upon divorce. However, establishing new documents will clarify your current preferences without any ambiguity.
Our estate planning attorneys can assist in drafting these critical documents to ensure they align perfectly with your current circumstances and legal requirements in Colorado.
Updating Beneficiary Designations
Often overlooked, beneficiary designations on financial accounts and insurance policies should be reviewed and possibly altered following a divorce. These designations typically supersede instructions in wills, meaning it’s vital to ensure they reflect your current wishes. This adjustment ensures that your financial assets are not automatically passed to your ex-spouse upon your death.
While some aspects, like retirement accounts, are governed by federal laws requiring spousal consent for beneficiary changes, it’s crucial to address these as soon as you legally can. This prevents any future complications with your estate distribution.
Trusts and Minor Children
If you have minor children, setting up or revising a trust may be advisable. A trust can provide for the management and protection of assets you wish to leave to your children until they are old enough to manage them responsibly. This is particularly important if you’re concerned about your ex-spouse’s influence over those assets.
Updating your trust or establishing a new one can ensure that your children’s financial needs are met according to your specifications, without unintended interference from your ex-spouse.
Considerations for Jointly Owned Properties and Businesses
Properties and businesses owned jointly with a spouse require special attention during and after a divorce. Decisions must be made whether to continue co-ownership, buy out the ex-spouse’s share, or sell the property and split the proceeds. These decisions should be reflected in your estate plan to ensure clear legal standing and proper management of assets.
Our firm offers tailored advice on restructuring your assets post-divorce, helping you make informed decisions that best serve your long-term goals and legal compliance.
Divorce is a significant life event that necessitates a thorough review and often a complete overhaul of your estate plan. At Evans Case, we understand the complexities involved in ensuring your estate plan reflects your current life situation. If you are going through a divorce or have recently been divorced, we encourage you to contact us today. We are here to help you update your estate plans and protect what matters most.
