None of us like to think about death or dying, but having a clear plan in place can help to reduce distress and confusion in an already difficult time. Ensuring that you have a clear, legal estate plan in place allows for your assets to be divided quickly and without fuss, and also ensures that the right assets are distributed in the right places, according to your wishes.
Divorce and second marriages are a chance to start afresh, but can cause complications when it comes to managing your affairs after death. Make sure that you have ticked every box, to help reduce any unwanted surprises for those left behind once you have passed.
What Does An Estate Plan Do?
An estate plan is a document which lists all of your desires for your assets after your death, or in the event that you become incapacitated. This is a legal document, setting out your wishes, and will allow a court to begin the process of dividing and distributing your estate, without the need for validation or intestate laws coming into play. A good estate plan will outline all the essential details, from your desire for long-term care, to the division of your estate to those you nominate in the document.
There are four main parts to an estate plan:
● Durable power of attorney
● Living will
● Health care proxy
● Last will and testament
What Happens If I Don’t Have A Will?
In short, the absence of a will means that the estate will be automatically assigned to the heirs. This will usually automatically go to the spouse, if there are no descendants or surviving parents. If these family members are alive, the allocation is as follows:
- The first $200,000, plus ¾ of any balance of the intestate estate to the spouse, if no descendant survives the deceased, but a parent does.
- The first $100,000, plus ½ of any balance of the intestate estate to the spouse, if all of the surviving descendants of the deceased are also descendants of the surviving spouse, and the surviving spouse has one or more surviving descendants who are not descendants of the deceased.
- The first $100,000, plus ½ of any balance of the intestate estate to the spouse, if one of more of the surviving descendants are not descendants of the surviving spouse.
As you can see, it is easy for things to get complicated – especially if second families are involved – and so a will is an essential document to help your family in a difficult time.
What Is Probate?
If there are questions over the validity of the will, the estate may be required to go to probate. This is a formal court proceeding, and will allow the court to legally decide who inherits your assets.
The primary purpose of a probate hearing is to validate the will, appoint an executor and issue a certificate of appointment, which can be used to liquidate and redistribute assets. This can be a lengthy, stressful process, which can stir up tension and bad feelings amongst those left behind.
How Does Divorce Affect My Estate Plan?
You will need to make alterations and adjustments to your estate plan in the event that you and the named spouse divorce. The divorce will remove your ex as a beneficiary, but there may still be other implications to consider.
You will need to update any existing estate plans; though your ex-spouse will be automatically disinherited, they may not be automatically removed from beneficiary status. As an example, you may have named your spouse as the beneficiary of your 401(k) account – they will need to be manually removed from this through the creation of a new estate plan.
The testator may also be required to amend documents such as power of attorney or health care proxy – it is typical to name a spouse on these, so you need to remove their name, and update with your new spouse or appointed party. Any tax-saving strategies will also have to be managed, and updated accordingly.
What About Children?
Children will still be your financial responsibility, even if you divorce their parent. If you are married and die, your spouse will automatically retain sole custody of your children. This can make things tricky if you divorce and remarry; do you want your new spouse to retain custody, or will this revert to the other parent, your ex? What about any step-sibling relationships? Without written confirmation, this can get messy. The conversations may be hard, but it is crucial that you, your ex and any new partners sit down and discuss your wishes well ahead of time, and that these wishes are drawn up in writing as part of a legal estate plan.
What if I Want To Provide For My Spouse?
In some cases, ex-spouses may still wish to provide for one another in the event of their deaths, or make sure that their families are financially protected. This can be common where long-term illness is involved, or if the split is amicable.
In this case, assets such as joint trusts will need to be considered, and you will have to make sure that all existing documents carry your new wishes in writing. If this is not legally binding, your new spouse will automatically inherit the burden of your estate if you die intestate, as we discussed earlier.
What Can We Do?
Here at Boyd & Boyd P.C., we have a commitment to helping you manage your estate in the easiest possible way. Our team of estate planning attorneys have the skills you need to draw up your plan, helping your loved ones stay secure after your death. Get in touch today, and see how we could help.