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Important Estate Planning Considerations When You’re Divorcing
One aspect in a divorce that you and your soon-to-be-ex-spouse will need to work out is how you want your estate to be distributed once you’re no longer married. Let’s take a look at how this works and what steps you need to take.
There are only two things we can all count on—death and taxes. Unfortunately, your passing is something you have to take into account during a dissolution of marriage.
Here’s what we mean: In a divorce, there’s a lot to work out between you and your soon-to-be-ex-spouse. One aspect you must decide is how you want your estate to be distributed once you’re no longer married. Let’s take a look at how this works and what steps you need to take.
Reasons Why You Want to Update Your Estate Plan During a Divorce
When you create an estate plan, you’ll be asked to choose who you want to be the beneficiary or beneficiaries. These are the individuals who’ll benefit, or receive the financial payout, in the case that you pass away.
The same is true if you wish to remove someone from that plan. If you’re married, you’ll most likely name your spouse as your primary beneficiary. But if you get divorced, then it becomes necessary to update that plan and remove your former spouse.
If you die with someone listed as the beneficiary of your estate, that person will inherit your assets. Before you die, your beneficiary may also have power of attorney over you—that is, the ability to make decisions about your health if you become incapacitated and can’t choose for yourself.
That’s why it’s essential to have the information on your estate changed as soon as your divorce is finalized. If you don’t, then your ex-spouse could inherit everything or make decisions about your health.
When you update your estate plan, you’ll need to adjust the following:
- Your last will and testament;
- Your insurance policies, including your life insurance;
- Your power of attorney and advanced care directives (such as a living will); and
- Any trust agreements you may have.
What Happens If I Don’t Update My Will and Life Insurance?
Updating your important documents to reflect your new status is important. But what’s just as important is that you should do this as soon as possible.
If you don’t make these important changes, you’re at risk of having your former spouse inherit everything. Not to be morbid, but literally, you could walk out of court and a week later get killed in a car accident. This is the kind of situation that we hope never happens, but you need to act proactively and preventatively. So if you haven’t updated that information, then your ex will still be your beneficiary. That means they can inherit your money and other assets, and can also claim your life insurance payouts. If you make the necessary changes now, then your ex will be cut off from your future plans.
Get Your Finances in Order Now, Before the Court Does It for You
New Jersey law is different from most states in that it actually has laws in place to remove your spouse as part of your will. In fact, under this law (N.J.S.A. 3B:3-14), a former spouse is removed from the estate plans when a divorce is finalized.
However, there are still potentially complicating factors. For instance, the law doesn’t make provisions for areas such as life insurance benefits. If your former spouse is listed on the policy, then he or she will remain the beneficiary unless you designate someone new.
Also, if a person were to die before the divorce is finalized, then the ex-spouse would still be considered the beneficiary of all estate plans. For that reason, it may be in your best interest to change this as soon as you begin the proceedings to ensure the rest of your family, like your children, will be protected.
Partnering With a Family Law Attorney Is One of the Best Ways to Protect Your Assets
Changing your last will and testament as well as other documents and insurance that your ex-spouse is listed on as beneficiary can take time. Understanding all the documents that need to be updated as well as the future considerations for possible remarriage, children’s futures, and New Jersey laws in those regards can be overwhelming without an experienced attorney.
For instance, if you remarry, there may be issues with the inheritance rights unless you have a family law attorney who can help you set this up to reflect your true wishes. Otherwise, both your current spouse and your ex could spend months fighting it out in court after you pass. The same is true when trying to create an estate plan that provides for children from either marriage.
If you’re considering a divorce in New Jersey, there’s a lot more that needs to be handled than filing a few papers and working out the current finances. Financial planning and estate planning will also be affected greatly. That is why it’s so important to hire an experienced family attorney who can help you secure your assets and insurance policies so that your ex won’t have access to your finances or even hold power of attorney over you, should the worst happen.
Contact the Experienced Family Law Attorneys at Smedley Law Group in West Deptford, NJ Today
If you’re thinking about filing for divorce, you’ll also most likely be dealing with another matter like estate planning, child custody, child support, or division of assets, so you’ll need to speak with a qualified attorney. The New Jersey family law attorneys at Smedley Law Group represent clients throughout the state, including Williamstown, Cherry Hill, Runnemede, and Westville. We understand how challenging this time can be for you, which is why we will fight hard to protect your interests, and the interests of your loved ones, throughout the legal process. Call us at (856) 251-0800 or fill out our confidential contact form to schedule a consultation. We have an office conveniently located at 750 Cooper Street, Woodbury, NJ 08096.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.