New Year After Divorce; 6 Financial, Legal, and Other Tips!
The holiday season is here, and it's a great time to start looking ahead and moving forward after your divorce. As the year comes to a close, it's an excellent opportunity to think about your plans for the future and get your financial and legal affairs in order.
It's perfectly understandable if the last thing you want to do after wrapping presents is to wrap up documents and tasks, but taking care of them will help set you up for a successful new year. So why not take a little time to look over some of these things you can attend to in January to start the new year off, right?
Here are some key areas to focus on:
UPDATE AND REVISE YOUR ESTATE PLAN
Estate plans created during your marriage need to be revised with new estate planning documents. If you do not update and revise your estate plan, your ex-spouse may inherit assets. If your ex-spouse remarries, his or her new spouse and their children could inherit.
1. YOUR LAST WILL AND TESTAMENT:
Revoke your old will or trust that names your ex-spouse and draft a new one. If you have not done this yet, it’s essential to do this quickly, especially if you have children who will need to be provided for if you pass away. If you have custody of your children and don’t want your ex-spouse to have custody if you die, you should write and attach that statement to your will for the judge to consider.
After divorce, the best way to revise a will is to execute a new one and revoke your old one to make a new one that reflects your current wishes. This should include the persons or entities you wish to receive your property, the person you wish to be the executor of your estate (chances are your current will designates your spouse), and the person you would like to be the guardian of your minor children and their property.
2. LIVING TRUSTS:
Just like a will, a new living trust should also be created after a divorce. If you have minor children, your minor children can be beneficiaries of the new trust, and your ex-spouse can be prevented from controlling their assets. You can designate the new trust as the beneficiary of various assets, such as pay-on-death bank accounts, transfer-on-death brokerage accounts, and life insurance policies.
Even IRAs, 401(k)s, 403(b)s, and pensions can designate the trust as beneficiary, but you need to be mindful of specific tax ramifications. There are ways to transfer an IRA to a trust that will extend the time when the funds must be distributed (and become taxable), thereby maximizing the account’s growth. A living trust must contain specific language to accomplish this tax advantage.
Suppose the divorce decree allows one party to remain in the family home (typically for life or until the youngest child attains the age of majority). In that case, a trust can also be used to shelter the property from creditors or a future spouse.
3. BENEFICIARY DESIGNATIONS
Your ex is probably designated as the beneficiary on various bank and other financial accounts, life insurance policies, and possibly on real estate and motor vehicles if allowed in your state. You will need to change the designation of such beneficiaries. If you are setting up a new living trust, you may want to name the trust as the beneficiary, especially if you have minor children. Otherwise, a minor beneficiary will need a guardian, and the court may appoint your ex-spouse.
Generally, retirement accounts and pensions are considered marital assets and are divided between the parties in a divorce. Your divorce judgment may determine what, if any, changes you can make to the beneficiary of such accounts.
To make a beneficiary change, you must obtain the necessary forms from your financial institution, brokerage firm, or employer.
4. CHANGE YOUR NAME:
If you decided in the name year you want to change your name back after your divorce, you’d need to update your voter registration, passport, driver’s license, and other essential documents.
5. UPDATE YOUR ADDRESS:
If your residence has not changed, your ex’s name may still be on the utility, cable, internet, and other bills. In most cases, changing them to your name is as easy as a phone call, or if you manage your bills online, you can generally edit your account holder information online.
6. FIX YOUR ONLINE SHOPPING OR SERVICE ACCOUNTS:
If you have shared an online shopping account such as Costco, Amazon, Chewy, etc., or any online streaming services ( think about it..do you really want to keep seeing your ex’s name every time you sign on?) I didn’t think so —remove your ex’s name and profile from all those accounts.
Divorce can an exciting new chapter in your life. I know this from speaking with and helping countless people who’ve found success after divorce.
If you have any questions, I can help you make a plan for moving forward.
Schedule an appointment at Van Tassel Law