When California residents go through a divorce, their estate plans are usually the furthest things from their minds. Instead of thinking about wills, trusts and medical directives, most people start thinking about their immediate financial needs, child custody arrangements and emotional turmoil. Unfortunately, this inattention has the potential to cause problems, as divorce has an impact on multiple aspects of your estate plan.
Changing medical directives
One of the most important components of an estate plan involves naming someone to make medical decisions on your behalf if you can’t make them yourself. Most people have their spouse listed as their medical power of attorney. After a divorce, you probably don’t want your ex making decisions about your medical care.
Tweaking your will
Estate planning is largely about deciding who gets your assets after you die by creating a will. Many married people leave the majority of their assets to their ex with written directives about which heirs receive what assets after the death of the second spouse or if the spouses are together when they die. After a divorce, this doesn’t work.
First, you probably won’t have as many assets after your divorce because of a court-ordered division of assets. Additionally, you probably don’t want to leave your remaining assets to your former spouse. Tweaking your will after your divorce allows you to reassess your plan based on your new financial status while also ensuring that you leave what you have to the people who remain in your life.
Changing insurance policies
If you have life insurance policies, each policy has a beneficiary designation on it. It’s typical for married couples to list one another as the primary beneficiary of at least one of their policies. Following a divorce, most people don’t want their ex to financially benefit from their eventual passing.
Divorce affects every aspect of a person’s life, including their finances. Divorce also directly impacts estate planning and how you plan for your future.