Two estate planning changes divorced parents should consider
On behalf of Pedrick Law Group, APC on Wednesday, May 15, 2019.
Your divorce has probably already caused many changes to your life. You may not see your children as often as you are used to, you may have a new house or apartment and you may still be acclimating to your new routines. Although you may feel like divorce has already caused more than enough change for right now, getting a divorce also means you should update your estate plan.
There are many updates that you may need to make to your estate plan after divorce. You will probably want to remove your spouse’s name from your estate planning documents wherever possible, and changes in your financial situation may need to be reflected on certain documents. However, as a divorced parent you may also benefit from changing the way you use your estate planning documents to protect your children.
Choosing a new guardian may be appropriate
Many parents realize that they can use a will to name a guardian for their minor children. If you and your ex-spouse previously selected a guardian for your children, it may now be an appropriate time to reconsider that appointment.
If you die unexpectedly and your ex survives, your children will most likely be cared for by your ex. However, if a court declares your ex unfit to parent or your ex also passes away, the court will need to appoint someone else as the guardian of your children. As unlikely as this could be, it is prudent to be prepared.
You and your ex may have once agreed to appoint a certain relative as that guardian, but divorce can change relationships. For example, you may have named your former sister-in-law as the guardian of your children, but after your divorce you may feel more comfortable naming your own sibling as the guardian. You should take time to make sure that whoever you name as the guardian is someone who you trust to care for your children as if they were his or her own.
A trust may be more logical than a will
Divorce may also change how you plan to leave assets to your children. Minor children cannot own property or manage their own money, so if something happens to you, your assets that you leave to your children in your will must be managed by your children’s guardian. If your ex is that guardian, your ex could end up with control of your assets.
To avoid giving your ex control of those assets, you might consider creating a revocable trust. With a revocable trust, you can choose someone to serve as the trustee and control the assets in the trust on behalf of your children.
You can set up the trust, so that your children receive their inheritance when they turn 18 years old. You can also set up the trust to disburse your children’s inheritance in small amounts throughout your child’s life.
Although a revocable trust may be more logical than a will for distributing your assets, it should not replace your will. You should use your will to name a guardian for your minor children and to distribute assets that do not get placed into your trust.
A well-crafted estate plan can help protect your children in case you pass away unexpectedly. However, the strategy for your estate plan may need to change after divorce to reflect your new situation.