If you’re divorcing, updating your estate plan may be the last thing on your mind. Yet, failing to do so can lead to repercussions in the long run. By making crucial changes, you can save your assets from falling into your spouse’s hands.
Beneficiary designation matters
You may have named your spouse as the beneficiary of your life insurance policy, in case you passed suddenly. Before you can remove them from this role, you must make sure your policy is revocable – some are not. If you two have children together, you may not want to change its designation right away. Your policy’s payout – were it ever used – would ensure your children’s survival. Thus, it may make sense for your spouse to still receive it. In most other cases, make sure to contact your insurance agent to designate a new beneficiary.
If you named your spouse as the beneficiary to your investment and retirement accounts, make sure you change these designations as well. Getting divorced does not automatically do so. But you must make these revisions before or after your split. You cannot remove your spouse as beneficiary during divorce proceedings.
Update your estate plan
You and your spouse may have created an estate plan during your marriage. Now that you’re divorcing, it’s crucial that you revoke this plan and make one of your own. Yet, you two may not have shared a plan – or may never have created one. If you have your own estate plan which named your spouse as a beneficiary, Michigan law allows your divorce to override this designation. But you will want to revise it anyway, so it leaves no ambiguity about who receives your property. And if you named your spouse as your estate’s executor, you will want to update it to remove them from this role.
As you prepare for your divorce, it’s crucial to revise your estate plan and change the beneficiaries of your accounts and policies as necessary. Failing to do so could lead your spouse to receive assets that you may want to go elsewhere. An attorney with family law and estate planning experience can help you understand what steps you need to take.