When you go through a divorce, it is often emotionally draining, not to mention financially draining. Once the final Marital Settlement Agreement is signed and sealed, both parties are likely exhausted and just ready to put the event behind them. Often they are just done with seeing and talking to attorneys and judges. However, there are several action items you must do before closing up those legal documents.
- Update your Powers of Attorney – you likely have your ex-spouse as the primary agent under your Property Power of Attorney for Finances, and the one for Health. This is the time to choose other persons you would rather have make those decisions for you.
- Update your Executor and Trustees – This is also an important document change to make. If you die your ex-spouse may be responsible for taking over your finances and make decisions on how it is spent. This is the last thing you probably would want.
- Update your Will/Trust Distribution provisions – Although many documents do have a provision to eliminate an ex-spouse as a beneficiary, this is not always the case. Many documents state that the assets go to the ex-spouse upon your death, so it is important to change that based on your current wishes.
- Update Guardians – If you have minor children, review the persons you have chosen as Guardians for your children. Perhaps you chose your ex-sister in law, and you no longer want her to be the person. It is probably the worst situation to put your minor children to go through…making each side of the family fight over who takes care of them. Carefully choose the persons you want now, and make sure your documents reflect your choices.
- Update your beneficiary designations – whether you have retirement accounts and life insurance at work, or have private accounts, always update them to be the right beneficiaries. Unfortunately in IL, the designations are governed by contract law. This means that even if you are divorced, the company must honor your beneficiary designation as a matter of contract. Therefore your assets can go inadvertently to your ex-spouse, not to your family.
- Life Insurance – Review your life insurance requirements under the Marital Settlement Agreement (MSA) – many MSAs require that you have life insurance insuring your life, that will pay out to your ex-spouse. However, the MSA typically states that it’s for a period of time, for example, until the last child turns 18, or completes college. After that triggering event, you may not be required to pay out that policy to your ex-spouse. This situation can be addressed in your Trust. The document can state that the proceeds will only payout to the ex-spouse if the triggering event has not occurred. Otherwise if it has occurred, then the death benefits will go to your family members named in your trust.
So even if you are mentally drained from your divorce process, remember to do all of the above actions. Otherwise your assets may potentially go to your ex-spouse upon your death.
Meet with a qualified estate law lawyer in Rolling Meadows, IL during the divorce process so you don’t forget to do these important steps.
Thanks to Bott & Associates, Ltd. for their insight into estate planning and what to take care of after a divorce.