Estate Planning After Divorce

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It’s a relief to have the judge approve your Separation Agreement, but you still have a few more things to do, before you fully free your finances. It’s now time to do some estate planning after divorce. It’s never fun to think about death, or your ex, but you’ll have to push through the discomfort and check on these important financial items before you’re done. Otherwise, your ex-spouse might get a windfall when you die.

Here are the most important things that a newly divorced person do, to ensure that they start their new chapter on the right financial foot:

Close Joint Accounts and other Separation Agreement “to do’s”

There are likely to be a bunch of financial loose ends in your Separation Agreement or Judgment: Transferring retirement account funds via QDRO, closing joint bank and brokerage accounts, refinancing or selling real estate. Don’t sleep on these important tasks. It gets harder to get these things done as time marches on. It’s also a big liability if you die before it’s done, and a big headache for your personal representative (fka: “executor”). Do you want your personal representative left tying up the loose ends on your divorce because you didn’t get around to it? I didn’t think so.

Change Beneficiaries

Generally, a Separation Agreement pursuant to a divorce will state that the ex-spouse is not entitled to assets distributed pursuant to a will or to probate, but some assets don’t go through probate. Those include: Joint bank accounts, retirement accounts, and life insurance benefits. After divorce, the parties should change the beneficiaries on all retirement accounts, life insurance, and “transfer on death” accounts. The divorce agreement usually requires parties to close all joint accounts within a short time frame. Be sure to follow through, or your ex-spouse will get all the funds in a joint account after you pass, and your heirs may not know to chase after those funds.

Set up a Trust for Minors

Many divorced parents are required to have life insurance that benefits the children. This is intended to fulfill their child support obligation if the parent dies while the children are minors. Some divorced parents prefer not to have their ex-spouse manage the children’s money. If you feel that way, then you can have the life insurance proceeds left to a trust in the child’s name, and name a trustee that you believe will responsibly manage the money.
Single parents who want to leave their assets to their children may want to set up a trust for minors. In Massachusetts, if a child inherits money, the state establishes a trust and names the trustee under the Uniform Transfers to Minors Act. The trustee can use the trust funds to provide for the child’s use and benefit. At the age of eighteen, the child inherits the remaining principal. Some parents prefer to have their children inherit at an older age, and prefer to name the person who manages the funds. For those parents, a trust for minors is appropriate.

Execute a new Will

Lastly, I suggest having a new will drafted and executed. This is not simply to take your ex-spouse’s name off of the will, but to ensure that your children or your step-children (if you are getting remarried) will receive their intended inheritance. You may have seen this story in the Boston Globe about a person who cared for her step-father for many years, as he was ill and dying, and she continued to live in his home. But because he didn’t have a will, the rightful heirs of the home are the step-father’s estranged nieces and the step-child was forced to move out.

For those who like checklists, here you go:
  1. Close joint accounts.
  2. Transfer real estate into the appropriate name.
  3. Change beneficiaries on life insurance, retirement, and brokerage accounts (see #5).
  4. Do you have any accounts with a transfer on death provision? Make sure those designated beneficiaries are correct.
  5. Establish a trust for the benefit of the children, and make it the beneficiary of any asset that would otherwise transfer outright to a minor child.
  6. Double-check and possibly re-write your Will.
If you’re ready to get started, reach out and we can help set you up on the right foot for your next chapter.

Set up an appointment for an estate planning consultation

Rebecca Neale

Principal Attorney

As an attorney, Rebecca represents people in divorce, custody, and guardianship proceedings. She also advises people about end-of-life decisions and creates estate plans tailored to their needs and goals. Read more about Rebecca’s Experience here.
Bedford Family Law

Bedford, Massachusetts

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When you reach out to Bedford Family Lawyer for a consultation, we will ask, “What is your goal?” We want to know how we can get you from where you are now to where you want to be, and we will show you the different paths to get there. 

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