Part of parenting is planning for your children’s financial security if you were to die or become incapacitated. That doesn’t change just because you and your co-parent are no longer married.
What does change after a divorce is how you plan for your children’s future. Failing to update your estate plan can leave your children unprotected. However, taking proactive steps now can help ensure that what you leave behind truly benefits your children.
Updating your estate plan
You may assume that all your assets will automatically pass to your children upon your death. But if you fail to update beneficiary designations, an outdated will or joint ownership arrangements, your assets can unintentionally go to the wrong person. Even if that person is the children’s other biological parent, you have no guarantee they will do the right thing and redirect your assets to your children. It’s far better to create a new estate plan that ensures your children remain the priority and that your wishes are honored.
It’s essential to update your will after your divorce. It should state who will manage your estate and how you want your property distributed. If you created a trust during your marriage, you will also want to amend it or revoke it and set up a new trust that will protect your children’s inheritance. A trust is beneficial because it allows you to decide exactly how and when your children will receive their inheritance.
If your ex-spouse is listed as the beneficiary on your life insurance policies, bank accounts and retirement investments, then the proceeds will pass directly to them, regardless of what your will says. You need to update beneficiary designations to ensure that your assets go to the right parties.
Updating your medical and financial power of attorney documents is just as important as updating your will. If your ex-spouse is still listed as a POA, you may want to give the authority to someone else to make decisions on your behalf if you are unable to make them yourself.
Divorce creates many legal and financial challenges. Working with a legal professional is one of the best ways to protect your children’s inheritance. This can help ensure that you don’t overlook any important estate planning documents that could unintentionally leave your children without financial security.
