Going through a divorce is a major life event that can significantly affect your estate plan. If you are in Memphis, Tennessee, and facing a divorce, it is important to understand how this change impacts your estate planning documents and what steps you should take to ensure your wishes are accurately represented.
Immediate effects on your estate plan
In Tennessee, once your divorce is finalized, any provisions in your will that benefit your former spouse are automatically revoked. This means if your ex-spouse was named as a beneficiary, executor or guardian, those roles are canceled by law.
This means that, after a divorce, it is crucial to update your will and trust documents to reflect your new circumstances. However, this automatic revocation does not extend to other estate planning tools like trusts, powers of attorney or beneficiary designations on life insurance policies and retirement accounts.
Revising beneficiary designations
Beneficiary designations on life insurance policies, retirement accounts and other financial assets are not automatically changed by a divorce. You will need to contact each financial institution to update these designations. Otherwise, your ex could get these assets, regardless of the changes in your will.
Powers of attorney and healthcare directives
If your ex-spouse is named in any powers of attorney or advance healthcare directives, it is important to revoke these documents and create new ones. This will make sure that you are taken care of my someone that you trust.
Planning for minor children
For those with minor children, you need to update your guardianship provisions. While Tennessee courts prioritize the best interests of the child, clearly stating your preferences can guide the court’s decisions. Additionally, setting up trusts for your children’s inheritances can help manage the funds responsibly and prevent your ex-spouse from controlling those assets.
Tax considerations
Divorce can alter your tax situation. This, in turn, should alter your estate plan. Luckily, Tennessee does not have a state inheritance tax. However, federal estate taxes might nonetheless apply, but that depends on the size of the estate.
Conclusion
Updating your estate plan during and after a divorce is not just advisable, it is necessary. By reviewing and revising your estate documents, you ensure they align with your current wishes and circumstances. Regular updates help prevent unintended outcomes and provide peace of mind that your assets will be managed according to your intentions.