How Divorce Affects Estate Planning
Last updated on August 2, 2024
Divorce is a complex process, affecting the involved parties emotionally and even financially. During the process, your estate planning needs may change significantly, as assets and beneficiaries often need to be reassessed and updated.
At Thelen & Associates, LLC, we have more than three decades of experience helping clients in Waukesha and across Wisconsin resolve their unique legal challenges in both family law and estate planning. We focus on creating a friendly yet professional environment where our clients can comfortably discuss their concerns and receive personalized legal guidance.
Will You Need A New Will After Divorce?
Divorce can significantly impact your existing will, often rendering provisions that favor your former spouse invalid. Here are key reasons and steps to consider a new will:
- Automatic revocation: Under Wisconsin law, any provisions in your will that benefit your ex-spouse are automatically revoked upon divorce. However, this does not mean your entire will is void; the remaining provisions stay in effect unless you create a new will.
- Update beneficiaries: Besides your will, it is important to update the beneficiaries on other estate planning documents such as life insurance policies, retirement accounts and payable on death accounts.
- Guardianship of minor children: If you have minor children, your will should nominate a guardian to care for them in the event of your death.
- Power of attorney and health care directives: Divorce also necessitates revisiting and possibly changing your power of attorney and health care directive documents.
- Trusts and joint accounts: If you have established any trusts or hold joint accounts with your former spouse, review and revise these arrangements as needed.
Some changes take effect after the final decree, so it’s crucial to consult with a lawyer to make sure your estate planning documents are updated to reflect your new situation in a timely fashion.
What Happens To Marital Agreements?
Some marital agreements, such as prenuptial agreements, are not considered estate plans. However, they can impact your estate planning. Here’s how:
- Prenuptial agreements: These agreements often outline how assets will be divided in the event of a divorce. After divorce, some terms of the prenuptial may remain relevant, but it’s important to review and possibly update them to reflect new circumstances.
- Postnuptial agreements: Like prenuptial agreements, postnuptial agreements can dictate asset division and other financial matters. They may need to be revisited to align with your revised estate plan.
- Enforcement of terms: Make sure that any agreements made during your marriage, including those regarding estate distribution, are still valid and enforceable after divorce. This may require legal guidance to confirm that it aligns with your current wishes and legal requirements.
Consulting with a lawyer from Thelen & Associates can help clarify how your marital agreements affect your estate planning and better ensure that all legal aspects are properly addressed.
Should You Consider Creating A Trust?
Creating a trust is an option worth considering, depending on your specific needs and goals after a divorce. Here’s why a trust might be beneficial:
- Asset protection: Trusts can help protect your assets from being distributed contrary to your new wishes.
- Control over distribution: Trusts allow you to set detailed terms for how and when your assets are distributed. This can help manage the inheritance for children or other beneficiaries post-divorce.
- Avoiding probate: Assets held in a trust typically bypass the probate process, which can save time and money and maintain privacy regarding your estate.
- Estate tax planning: Trusts can be structured to minimize estate taxes, which can be beneficial if your estate is large enough to be subject to estate tax.
- Flexibility: Trusts offer flexibility in terms of modification. If your circumstances change again, for instance, after a second marriage, trusts can be adjusted to meet new needs.
The lawyers at Thelen & Associates can help you evaluate whether creating a trust aligns with your estate planning objectives and provide guidance on setting up a trust that meets your specific requirements.
Contact Us Today
Get in touch with Thelen & Associates for knowledgeable legal guidance and support. Fill out our online contact form or call 262-200-8002 today to schedule a consultation and discuss how we can assist you with your estate planning needs and address any changes resulting from divorce.