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Estate Planning Prior to Divorce


Divorce often requires a complete reorganization of a person’s life. Reconsidering previous decisions regarding estate planning is an often overlooked part of the separation process. Before the divorce, a couple may have curated an estate plan that integrated life insurance policies, trusts, wills, and retirement accounts or plans. In a time of separating lifelong assets, individuals need to consider several factors when revisiting estate planning upon divorce finalization. 

What Does Estate Planning Include?

An estate is a collection of a person’s physical and financial assets. An estate plan dictates the allocation of these assets, including who will receive the assets, what assets are to be given, and when the assets are to be distributed. A person should consider any businesses owned, personal property, life insurance policies and beneficiaries, savings accounts, retirement accounts, residences owned, and trusts when estate planning. A power of attorney is also an important delegation to consider as it allows a designated party to act on a person’s behalf regarding medical and financial decision making.

Considerations for Estate Planning Prior to Divorce

Divorce can directly impact any existing decisions regarding estate planning. A spouse may have been designated as power of attorney, beneficiary to insurance policies and financial accounts, and may be named to inherit property or businesses prior to divorce. As the finalization of divorce approaches, a person should begin the process of reorganizing previously established estate plans. There are several factors to be considered when drafting a new plan:

  • Designated health care proxy- A spouse may still be delegated to make healthcare decisions on a divorcee’s behalf. 
  • Power of attorney- Similar to a healthcare proxy, a spouse may have been given power of attorney. This may need to be revoked and a new decision-maker selected.
  • Beneficiaries- A spouse may be named as a primary or sole beneficiary on existing life insurance policies, retirement accounts, and plans, pensions, and other financial accounts.
  • Updating a will- A will should be updated to establish new directions for distributing assets.
  • Prenuptial agreements– Existing prenuptial agreements may influence the distribution of assets.
  • Trusts- A new trustee may need to be selected to make financial decisions on behalf of living children if minor children are entitled to a trust. 

Most assets are not able to be reorganized until a divorce is finalized. Additionally, requirements regarding alimony, child support, and distribution of assets can affect the estate planning process. 

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