Going through a divorce is a difficult time for anyone. With negotiations, separation agreements, and sometimes less than polite terms, many individuals forget to handle proper estate planning during the process. Estate planning is one of those details that many couples never think about until necessary. During the course of a divorce, should something happen, it is possible that the other party may gain control over property, finances, and even your health if estate plans have not been separated. For those who are currently in the process of divorce, here are somethings to know about separating your estate plans.
An Estate Plan Is More Than Property
An estate plan typically contains more than just the joint property which couples are already negotiating over. It also includes power of attorney, a living will, life insurance, retirement accounts, and information on any trusts you may have. Over the years as couples continue to accumulate new assets, the estate plan should be updated. Most married couples will try to update their will during major life events such as the birth of a child or when they buy their first home. At the time of separation, there may be new items that need to be considered in the estate separation that had yet to be added to the plan. Until a divorce is finalized, as long as the estate plan is still joined, each individual is capable of capitalizing on it should something happen to the other person.
As odd as it is to think about, the simple truth is that the time for separation and divorce can span 12 to 24 months. During that time, any number of things could happen including an accident that leaves one individual in a compromised state where they are unable to speak for themselves. As the power of attorney is likely in their spouses’ name, this means that that person has the legal right to speak on their behalf.
What To Consider When Separating The Estate
Separating the estate does not have to be a messy process. In most cases, couples can come to an agreement to separate different assets and reassign things like power of attorney to a close family member or even children. Items such as home/vehicle ownership are generally already in the discussions during divorce proceedings. Separating the estate should be done immediate after filing for separation, or if you are already pending divorce, once the papers are signed. Consider leaving assets in a trust for children and assign a third party to manage the financial aspect of that trust until they are of-age to access it.