Divorce is one of life’s significant transitions. At the very minimum, people facing divorce should revisit their estate plans to protect their finances and assets. As an experienced Illinois estate planning attorney, I’m acutely aware of the complexity involved when legal and personal worlds intersect. When facing divorce, it is very important that you update how you want your assets distributed and who should step in to make decisions on your behalf in situations where you are not in a position to do so.
Divorce allows for a number of estate planning changes, including asset ownership, beneficiary designations, and decision-making authorities. Taking control of these matters in a timely and efficient manner provides not only protection for your financial future but also protection of your personal wishes.
Understanding How Divorce Affects Your Estate Plan
In Illinois, divorcing means you need to update your estate plan right away. In general, there are a few main steps involved in this process:
Updating Your Will and Trusts – After your divorce, you likely will want to update the beneficiaries in your will and any trusts. By operation of law, Illinois automatically revokes any provision in favor of a former spouse upon divorce. You will still want to do this for your own good and make sure the new documents on paper reflect your wishes in writing.
Revisiting your Power of Attorney and Healthcare Proxy – Divorce impacts the previous powers of attorney you had set up for both health and finances. You will likely want to name someone other than your ex-spouse to handle those critical decisions.
Change in Beneficiary Designation – Many people, after divorce, do not take the initiative to change the beneficiaries that are recorded on one’s life insurance policies, retirement accounts, among others. The consequence of such might be undesirable because such benefits may end up with a former spouse after the marriage has been dissolved.
Naming Guardianship – While you have minor children, you need to update your estate plan to include naming guardians for those children in case a disaster happens to you, through either incapacity or death. While the other parent typically assumes full custody, stating what you would want if that was not possible is reasonable and sensible.
Asset Protection – Divorce often leads to the division of assets that can drastically impact your estate. The overall value of your estate needs to be recalculated, and planning strategies need to be updated. This may include the creation of new trusts or other forms of asset protection.
Legal Issues And Forward Planning
Illinois law provides some requirements regarding estate planning and divorce, but your estate plan requires your personal, active attention. After the divorce, it is crucial that you revisit your estate plan with a qualified attorney to ensure your assets and children are protected as you would want them to be in your new situation, and all of the documents comply with updated laws.
Every aspect of your estate plan requires careful consideration. This includes not only the removal of an ex-spouse from positions of authority and beneficiary designations but also considering how this divorce will affect your general financial plan, including tax consequences and long-term asset management and distributions.
Frequently Asked Questions About Estate Planning After Divorce In Illinois
Do I Have To Change My Will After My Divorce?
Yes, you should make changes in your will to reflect any changes after a divorce. Although under Illinois law, any disposition made to the former spouse is revoked, changing it simply takes away all doubt.
What About Jointly Held Trusts?
Joint trusts need to be reviewed and, where appropriate, terminated or restructured in accordance with your updated post-divorce estate plan. You may also wish to establish new trusts that fit your changed circumstances.
How Does Divorce Affect My Powers Of Attorney?
The Illinois statute automatically revokes any agency of a former spouse in a power of attorney upon divorce. You still have to execute new documents and name another person to handle your affairs regarding your finances or healthcare decisions.
Should I Update Beneficiary Designations For Retirement Accounts And Insurance Policies Following A Divorce?
Yes. This will be an important step to take to ensure that these assets do not inappropriately pass to your former spouse at your death.
Contact Our Illinois Estate Planning Attorney To Protect Your Legacy
Estate planning after divorce requires careful consideration and legal guidance. At Bruning & Associates, P.C., if you are facing these challenges, we invite you to contact us so we can help make sure your estate plan is custom-fit to not only your present situation but also your future goals. Contact our Illinois estate planning attorney at Bruning & Associates, P.C. by calling 815-455-3000 to schedule your free consultation. Allow us to assist you with all of your estate planning needs so you can have peace of mind as you experience life changes.