and Probate Law Firm
Estate Planning and Divorce
As a Portland lawyer who specializes in estate planning, I have come to find that divorce is a reality that becomes a part of some clients’ lives. Whether they are coming off of a divorce, or they need to update their estate plan after a divorce, it is important to understand the relationship between the two. Estate planning and divorce are closely intertwined because a divorce can significantly impact your will, trusts, beneficiaries, and more. It’s crucial to review and update your estate plan as soon as possible when going through a divorce or after a divorce is finalized. Here are some important considerations:
- Revoke or Update Documents: You may need to revoke or update documents such as your will, revocable living trust, and powers of attorney to reflect your current wishes, especially if your ex-spouse was named as a beneficiary, executor, personal representative, trustee, or agent.
- Beneficiary Designations: Review and update beneficiary designations on retirement accounts, life insurance policies, and other accounts. In many cases, divorce automatically revokes your ex-spouse’s beneficiary status, but it’s best to confirm and make new designations. Furthermore, many financial institutions have their own internal guidelines for these matters, so confirmation is crucial.
- Guardianship for Minor Children: If you have minor children, you may have appointed guardians in your estate plan. After a divorce, you might want to reconsider your choice of guardians, taking into account changes in your and your ex-spouse’s circumstances.
- Asset Division: Property division during divorce can have tax consequences. Consult with a divorce attorney and also a financial advisor to understand how assets you receive during the divorce may affect your overall financial picture and estate planning goals.
- Update Healthcare Documents: Review and update healthcare directives (also known as “living wills”) and healthcare powers of attorney to ensure your ex-spouse is no longer granted decision-making authority over your medical care.
- Trusts and Divorce: If you have a living trust in place, revisions to the trust will likely be needed, especially in the areas pertaining to distributees, beneficiaries and trustees.
- Estate Taxes: Understand the potential estate tax implications of your divorce. Certain transfers between ex-spouses may be tax-free, and your estate planning should take this into account. For example, in the State of Oregon, there is an unlimited estate tax exemption between spouses, meaning that when the first spouse passes away, the remaining spouse will not face any estate taxes, regardless of the size of the deceased spouse’s estate.
- Child Support and Alimony: Ensure that your estate plan takes into account any child support or alimony obligations. This may affect the assets you have available for distribution to beneficiaries.
- Prenuptial or Postnuptial Agreements: If you have a prenuptial or postnuptial agreement in place, review it to determine how it affects your estate planning and asset distribution in the event of divorce.
- Regular Reviews: Even after your divorce is finalized and your estate plan is updated, it’s essential to periodically review and update your plan as your circumstances, assets, and wishes change over time.
Estate planning is a dynamic process that should reflect your current life circumstances and intentions. Going through a divorce is a significant life event that necessitates careful consideration of how it impacts your estate plan. To ensure your estate plan aligns with your post-divorce goals, work with an experienced estate planning attorney in Portland who can guide you through the process of updating and revising your documents as needed. If you have any questions about estate planning and divorce, contact Thapar Law at 503-295-9741 or send us a message here.
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