Once a divorce is finalized there are several steps that the parties should separately take to update their individual lives. This is often an overlooked process that can have negative or unintended ramifications.
Typically while a divorce case is pending, although not in every case, both parties are prevented by Court Order from altering their estate planning or changing the beneficiaries on life insurance, retirement accounts, etc. These changes should be made once the divorce has been finalized. If prior to the divorce there was estate planning of some form in place, it is likely that the surviving spouse has been designated the primary beneficiary under a Will, life insurance policy, retirement account, etc. Changing that beneficiary designation should be done once the parties are no longer married. The question then becomes who should be designated in place of the former spouse. For many people it will be their children, however if the children are minors, one might want to consider creating a trust for the benefit of the children, which would keep those funds out of the control of a former spouse. The provisions of any divorce decree also need to be considered if the divorce decree orders that one spouse will make certain provisions for a former spouse upon his/her death. For example, we often see the obligation to have life insurance payable to a former spouse in the event the party paying spousal support dies before the support obligation would otherwise terminate.
After a divorce is final, both parties should review all of their remaining assets and liabilities. Though not an all-inclusive list, we believe that one should: update a Will and change survivor beneficiary designations on life insurance, update retirement accounts and other similar accounts that allow beneficiary designations, and pursuant to the divorce decree each party should remove the other from joint bank accounts, credit cards, or other financial accounts. Consulting with a law firm experienced in family law as well as estate and asset planning matters is recommended to help accomplish this goal. Thomas Law Group is pleased to be able to assist our clients with these matters.