by Jackie Bedard
Whenever life changes happen, it’s easy to become overwhelmed. When married couples create estate plans, both spouses typically name each other as agents in case of incapacity and as primary beneficiary upon the first death. This is reasonable, but it’s important to ensure there are provisional situations addressed.
For example, what happens if you divorce? Between 1990 and 2010, the divorce rate doubled for people older than 50 and more than doubled for those older than 65, according to a recent Forbes article on estate planning for baby boomers. Divorce is a difficult decision, but you can minimize the long-term effects by handling these important estate planning issues right away. I recommend the following updates not only to those who are divorcing but also to those experiencing or expecting any major life changes during the year:
Wills & Trusts. Wills and trusts are an obvious place to begin. You need to ensure these important legal documents are updated and that loved ones and trusted advisers know where to locate them.
Beneficiary Designations. Update the beneficiary designations for life insurance policies and retirement funds. This is an often overlooked but crucial change to be made during divorce.
Health Care Power of Attorney. Change your healthcare power of attorney documents, naming who will handle medical decisions and advocate on your behalf in the event that you are incapacitated and unable to express your wishes. In addition, advanced healthcare directives (living wills) should be updated to reflect this change.
Financial Power of Attorney. A new designation should be made for the durable financial power of attorney, so that the correct person has authority to handle money matters if you are unable to do so.
Estate Planners. Change your estate planning attorney. Married couples generally worked together with the same planner when they created their plan, but when divorcing, you are most often best advised to find other planners to avoid a conflict of interest.
Qualified Domestic Relations Order. Many people may choose to allow ex-spouses rights to a portion of funds as part of the divorce settlement. File a Qualified Domestic Relations Order to designate exactly what those ex-spouses are entitled to and how it should be distributed.
Bedard, an elder law attorney with Carolina Family Estate Planning, can be reached at 919-443-3035 or www.carolinafep.com.