Divorced? Here Are 5 Must-Do Changes for Your Estate Plan
Jeff Bezos isn't the only one getting divorced this year.
As 2018 ended, divorces went up and it could be a trend. Financial uncertainty -- a common cause of divorce -- will likely break up more marriages in 2019.
If you have been there or done that, one thing is certain. It's time to revise the estate plan. Here are five must-do changes.
1. Don't Forget the Taxes
Death and taxes are sure; divorce is about 50/50. In any case, new tax laws changed the rules on alimony.
Alimony is no longer deductible by the payor, and it is no longer taxable by the receiver. That means nobody gets the benefit, except maybe attorneys who get to rewrite settlement agreements and draft estate plans.
That's all part of the reason for 2018 year-end divorce filings, according to Forbes.
2. Change Power of Attorney
If you had a proper estate plan when you were married, you probably gave your spouse power-of-attorney. Change that now.
The same applies for health care proxy. The last person you want to have power over your life is an angry ex-spouse.
3. Revise Your Trust or Will
This should be a no-brainer, especially if you die or end up in a vegetative state. You need a new trustee and executor after a divorce.
Even if Bezos and his estranged wife Mackenzie are still "friends," you can bet they are not leaving their half of the $137 billion estate to each other.
4. Review Life Insurance Policies
Typically, parents name each other as beneficiaries on their life insurance policies. If that wasn't part of their divorce settlement, it's time for a change.
If life insurance was made part of the deal, sometimes parties will agree post-divorce to change beneficiaries from ex-spouses to their children. They are most likely to survive their parents anyway.
5. Do Pre-Martial Estate Planning
Divorcees often give marriage another chance, which is a good reason to create a new estate plan. This time, however, they should do it before marriage.
An estate plan can strengthen a pre-marital agreement. If a trust owns property, for example, it is less likely to be deemed martial property.
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