3. Forgetting to change your will and insurance policies
To truly break free from your ex-spouse, once you are divorced, you should at least review your estate planning documents. Chances are that your ex-spouse is named a beneficiary in your will and insurance policies. Do you want your ex-spouse to benefit from your death should something happen to you? If the answer is “no” then you should consider changing those documents to reflect your current situation.
Some changes that could cause you to review and/or change your will and other financial documents are:
- Death of a beneficiary
- Marriage, divorce, or remarriage in a family
- Birth or adoption of a child
- Death or change of executor, agent, personal representative, trustee, guardian, etc.
- If you change your mind about the distribution
- If there is a significant change in your assets
- If there is a change in the tax laws
- If you retire
- If you buy, inherit, or receive assets as a gift
- If you move to another state
- Finally, any time you feel uneasy about your will.
Sometimes, people simply forget to change estate planning documents. After all, changing beneficiaries on an insurance policy is not anyone’s priority post-divorce, when there are more important things to take care of like the division of property and deciding on a workable parenting schedule. Other times, people may fully intend to change these documents, thinking that they will get to them later.
Well, forgetting to change such important documents can and will cause quite a few problems down the line, particularly if one spouse remarries. For example, many divorcing men in their thirties tend to remarry within a few years. Often with a new spouse come new children, so what can go wrong if the life insurance policy beneficiary designation was never changed? If the first wife was a sole beneficiary, she will likely get all the money, and the new spouse and the children might get nothing. If you want to provide for your new family after your death, make sure your estate planning documents reflect your current situation and needs.
After you go through a divorce, you need to make sure you review and change (if needed) all your beneficiary information on all accounts and policies, not just your will. Keep in mind that even if you change your will, if your ex is still the beneficiary of your IRA or life insurance policy, your will does NOT control or change the designated beneficiary of such assets.
Your Estate Plan should be reviewed periodically to ensure its accuracy, particularly when there is a significant change in your family or financial situation.