Proper estate planning can help ensure assets are transferred effectively and efficiently upon one’s passing. In addition, a well-drafted estate plan will include Power of Attorney documents for healthcare and finances to ensure one’s wishes are carried through.
In the event of a divorce, the wishes of the Trustors (person(s) who created the trust) may change, including who gets what and who makes healthcare and financial decisions for the Trustor. Non-probate assets that list designated beneficiaries, such as retirement plans and life insurance, may need to be updated as well.
It is important to note that some divorce proceedings can last for six months to a year. During that time, it may be difficult or prohibited to make changes to certain assets without court approval or the consent of both parties to the divorce. Therefore, while the risk may be low, the death or incapacity of one of the Trustors during the dissolution period may create an undesirable outcome.
We recommend that individuals periodically review their estate plan. In the event of a divorce, it may be advisable to meet with an attorney before-hand to see if any changes need to be made to the estate plan before starting the divorce process.
In other cases, a prenuptial or a post-nuptial agreement may be used to outline the estate planning objectives in case of divorce. This may allow an individual to protect the interests of children from a prior marriage, selected charities, or other heirs in the case of a prolonged divorce.