Divorce has far-reaching ramifications in a wide variety of areas. Take someone’s social life as an example. Pre-divorce, you may have a predictable circle of friends and acquaintances, but post-divorce this situation can change dramatically. Perhaps you need to create a new circle in order to better move forward. Another area which can be affected is estate planning. Understandably, spouses are often selected as beneficiaries for estate planning purposes. If spouses divorce, they are unlikely to want their ex-spouse be the beneficiary for anything, much less their estate. Divorce, therefore, tends to bring up numerous estate planning issues. In this post, we will identify and discuss several of the most significant estate planning considerations which spouses will need to think about.
Designate New Beneficiary to Will or Trust
A will is a legal instrument which predetermines the distribution of a person’s assets after death. A trust is a legal instrument which is established for the purpose of holding or using assets on behalf of a predetermined beneficiary. As a default matter, whenever a divorce occurs in Colorado, the law automatically removes ex-spouses from wills and trusts as beneficiaries. Also by default, once an ex-spouse is removed, he or she will be replaced by a “contingent beneficiary.” In many cases, this contingent beneficiary may not be who you want your entire estate to flow to. This being the case, spouses need to update their will and either dissolve or revise their trusts in order to ensure that assets are going in the desired direction. There may be a chance, for whatever reason, that spouses wish to include their ex-spouse in a will. This means they will need to take the proper steps and ensure that the ex-spouse isn’t automatically removed by operation of Colorado law.
One thing that spouses should keep in mind is that wills only include separate or non-marital property, because marital property is always subject to division in Colorado. The exception to this rule, of course, occurs when couples have either a prenuptial or postnuptial agreement, and that agreement excludes certain marital property. Ordinarily, without one of these agreements, marital property is divided equitably by the State of Colorado. If there is a prenuptial or postnuptial agreement, that property is not an estate planning matter and is outside of what this blog covers.
When it comes to trusts, you may also need to select a new trustee. Trusts have grantors, trustees, and beneficiaries – the grantor is the trust originator or creator, the trustee is the manager, and the beneficiary is the recipient of the assets of the trust. If your selection of a trustee was directly associated with your ex-spouse, then you might consider making a new selection. Perhaps the trustee was closely connected with your ex-spouse’s business or was a close personal friend; selecting a new trustee might be preferred in this situation.
Remove / Change Power of Attorney
A “power of attorney” (POA) basically grants a designated person the ability to manage certain aspects of the grantor’s life, such as finances, healthcare, and so forth. In many cases, people designate their spouse with POA for the purpose of managing certain things, and this may need to be changed following divorce. Rarely will it the case that someone wants to have their ex-spouse continue with POA; if this is the case, then you’ll need to remove the ex-spouse formally, and designate a new POA, or choose not to select a replacement altogether.
Contact the Drake Law Firm for Additional Information
These are just a few of the estate planning considerations which you will need to think about following divorce. Although handling these considerations may feel like a hassle after a divorce, the truth is that estate planning issues are absolutely necessary. You’ll need to resolve these potential issues at some point, and so sooner is usually better. For more information, contact the Drake Law Firm today by calling 303-261-8111.
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