A divorce can change your life in a number of ways. It can even impact your estate plan, especially if you do not make the proper changes once your divorce has been finalized. Here are a few effects divorce can have on your estate and what you can do to prevent major issues.
New spouse, new executor
Many people name their spouse as the executor of their wills or the trustee for their trusts. When a divorce occurs, these people often remain in their positions, which can be disastrous for your estate. After a divorce, review all estate planning documents and remove ex-spouses wherever they appear. You should also review beneficiary designations on life insurance policies and retirement accounts and make updates as needed.
Review your previous healthcare proxy selection
A healthcare proxy is a person who will speak on your behalf about medical decisions if you are incapacitated by illness or injury. If this person is your former spouse, it is best to make a change (unless you had an amicable divorce and remain on good terms). For instance, if your former spouse moved away he or she may be unable to make these decisions for you in a reasonable manner. You may also be uncomfortable with giving this person so much authority after your divorce, especially if it was acrimonious.
Change your financial power of attorney
Naming your spouse as your financial power of attorney is a prudent move until your divorce ends in marriage. If you subsequently fail to update this important document, your ex will have substantial power over your finances if you are one day unable to make sound decisions. That is why you should always take time to look over your estate plan after any major life event, especially divorce.