Estate planning is usually the last thing individuals faced with divorce think about. After all, they have many other things on their mind as they negotiate how to divide marital property and create a child custody agreement in some cases.
Yet, many reputable sources, like Forbes, report that spouses seeking a divorce should revise their estate plan. Is this something individuals should worry about?
How does a divorce impact an estate plan?
In North Carolina, the law revokes a former spouse’s authority to inherit anything from one’s will or administrate the estate – even if the estate plan still lists them as a beneficiary or executor of the will. The same goes for:
- Any trusts listing an ex-spouse as a beneficiary
- The authority to make medical decisions on one’s behalf (healthcare power of attorney)
- Insurance policies listing them as beneficiaries, unless noted otherwise in the divorce decree
It is important to note that these automatic changes only occur once the divorce is finalized. From the time when individuals file for divorce and throughout the process of divorce, the original terms of any estate planning documents still apply.
So, is it still important to review the estate plan?
The short answer is yes.
The likelihood of an emergency event occurring during the process of divorce is low. However, North Carolina does require spouses to separate for one year and one day before they can file for divorce. After that, it could still be a few months before spouses can finalize the divorce, depending on the particular details they must address.
Additionally, this past year reminded many families that nothing is certain. Even if one’s ex-spouse will no longer have authority over their medical care, finances or estate after they finalize the divorce, it is often still helpful to review estate planning documents for a few reasons:
- Ensuring their ex-spouse does not have this authority during the separation period or divorce proceedings, just in case
- Preparing for revisions since a divorce will likely affect one’s finances and property holdings, which, in turn, affect the property included in an estate plan
Managing the stress of the divorce proceedings can be overwhelming. Thinking about the future on top of that can be even more so, but being prepared can help take some of the weight off of individuals’ minds.