Estate Planning Considerations for Divorce
Divorce can be a difficult and emotional experience, but it also requires careful financial consideration. In particular, a divorce will have an impact on your existing estate plan. From asset division and taxes to guardianship of children, there are important steps that need to be taken to ensure all assets and interests are properly considered. It is important to understand exactly how divorce will affect your long-term goals and estate plan so you can make informed decisions.
Asset Division & Estate Plans
When it comes to asset division during a divorce, it is important to understand how it will impact your estate plan. It is essential to review any existing estate plan and adjust it if needed to accurately reflect the financial outcome of the divorce. Also, the divorce could cause you to lose ownership of items that you had intended to pass along to certain beneficiaries. For example, if you were going to give an automobile to your cousin, but the car goes to your ex-spouse in the divorce, then you won’t be able to stick to that original inheritance plan.
Certain types of marital property should be taken into consideration, such as:
- Real estate
- Retirement funds
- Investment portfolios
- Business interests
- Life insurance policies
Every divorce is unique, and so is every estate plan. However, each of them is practically guaranteed to deal with financial assets, real estate, and physical property in some way. To make sure that your divorce and estate plan are both fairly considering your assets and how that can affect your loved ones, too, you should work with a legal team that is familiar with both areas of the law.
Tax Implications of Divorce
Divorce can have a significant impact on your tax situation, which in turn will affect your estate plan. Depending on the financial decisions you make during a divorce, you may face increased taxes or other financial consequences that are not immediately apparent. You can also find yourself in a completely different tax bracket once you are divorced and no longer filing jointly.
It is important to understand how every asset will be taxed upon transfer or liquidation, as any changes in taxation rates can significantly modify your estate plan. Additionally, review any existing trust documents or wills to ensure that they are updated with accurate and up-to-date information post-divorce.
Update Advance Healthcare Directives
It is important to review your advanced healthcare directive or health care surrogacy plan after going through a divorce. The document serves as the legal authority for individuals to make medical decisions on your behalf if you become incapacitated and are unable to make decisions yourself. If you have named your ex-spouse as the person in charge of healthcare decisions, it may put everyone in an extremely difficult and complicated situation if they ever have to step into that role. You should review your advance healthcare directives to see if the instructions still match your wants and that the person who is given that authority is someone fit for those decisions.
Concerns About Guardianship
If you have a guardianship directive or letter of guardianship in your estate plan, it is important to review it before your divorce finalizes. You will want to make sure that any person appointed as guardian is someone who you trust and could provide care for your children or dependents. This situation can become complicated if your family will become somewhat estranged from your ex-spouse’s family due to the divorce. You may wish to appoint guardians from both sides of your family or assign guardians outside of the two parties involved in the divorce. By doing so, you can guarantee that a family member or trusted friend will be able to provide the necessary guidance and support should they ever be called upon.
Get Legal Help for Divorce & Estate Plans
An attorney can help you review and update an estate plan after going through a divorce. It is essential to update the documents to reflect your new circumstances, such as revoking any directives that are no longer relevant or may be complicated due to the separation. An attorney can provide guidance on how to create a new plan and make sure it complies with all relevant laws. They can also help ensure that your wishes are accurately reflected in the documents, allowing you to have peace of mind knowing that your estate plan is up to date.
At Lusk, Drasites & Tolisano in Cape Coral, our trial attorneys are well-versed in both divorce cases and estate planning laws in Florida. If you are going through a divorce and have concerns about what that will do to your estate plan, then we should be your first choice of legal counsel. Dial (239) 908-4930 to request a FREE consultation with our team.