Divorce impacts on estate plans and beneficiary designations
Divorce often creates the need to update estate plans and review beneficiary designations. Individuals must take steps to ensure their wishes reflect the changes in their relationships.
Reviewing wills
A will outlines who receives a person’s assets after their death. Divorce doesn’t automatically void an ex-spouse’s name from a will, which means they could still inherit unless the document gets updated. New York law often treats an ex-spouse as if they predeceased the person, but they might still need other changes.
Updating beneficiary designations
Beneficiary designations on retirement accounts, life insurance policies, and bank accounts can often override a will. This means if an ex-spouse remains listed as a beneficiary, they may still receive those assets. The law usually considers a divorce to revoke a beneficiary designation for an ex-spouse, but financial institutions may not enforce this. If they don’t enforce it, it could result in a drawn-out legal battle.
Changing powers of attorney and healthcare proxies
Many people give their spouse authority through powers of attorney or health care proxies. If these documents remain unchanged, an ex-spouse might continue holding decision-making powers. Updating these documents ensures that trusted individuals handle health and financial matters in case of incapacity. This change should happen as soon as possible after a divorce to avoid complications.
Avoiding post-divorce confusion
Addressing estate plans and beneficiary designations after a divorce is crucial for maintaining control over future decisions. Making timely updates ensures that your assets and responsibilities go to the right people. Keeping these documents current provides peace of mind and helps avoid unnecessary complications.