If you are facing a post-divorce situation, you might wonder how your assets will be divided. The Family Code divides assets and debts based on the length of the marriage, the age of one spouse, the contributions of each spouse to the marriage and the income of each spouse. The law also allows each spouse to keep assets they had before the marriage.
What Is Post-Divorce Beneficiary Planning
Post-divorce beneficiary planning is the act of updating your estate plan after your divorce is final. It includes making sure that your will, insurance policies, and other account beneficiary designations reflect all of your post-divorce goals and objectives.
Without it, you run the risk of inadvertently disinheriting your children.
With this in mind, post-divorce beneficiary planning can help you make sure as much of your estate goes where you want it after you pass away.
Here are five reasons why post-divorce beneficiary planning is important.
1. Conflict of Interest with Ex-Spouse
In many cases, a person wants to ensure that the children remain financially secure after the death of a parent after a divorce. If you’re remarried and your former spouse is still living, it is important to take steps to ensure that your new spouse doesn’t end up inheriting all of your assets.
2. Protect Your Assets
If your children are entitled to receive part or all of your assets, it is important to make sure that your assets and property are protected in case you pass away. Otherwise, your estate could be at risk of being subject to the debts of your ex-spouse and their new spouse. Without a beneficiary designation for your assets, the assets will be subject to your estate, which could dramatically diminish the amount of money your children will receive.
3. Avoid Probate
Post-divorce beneficiary planning is also important to avoid probate. Probate court processes are expensive, time-consuming, and can delay the transfer of assets to your loved ones. It can also result in unintended consequences, such as property being transferred to your ex-spouse as a result of the law of intestate succession.
Since asset protection is an important estate planning concern, post-divorce beneficiary planning is vital to maintaining the goals of your estate plan.
4. Maintain Your Legacy
Post-divorce beneficiary planning is also important to maintain your legacy. After a divorce, you may find that you are less involved in the lives of your children. Many parents have a difficult time seeing their children following the divorce, and in some cases, children resent their parents for the divorce.
Post-divorce beneficiary planning can help you maintain your ties with your children, and make sure that your children are taken care of after you die.
5. Avoid Inheritance Taxes
Finally, post-divorce beneficiary planning is important to avoid inheritance taxes. Although many people think of inheritance taxes as a tax that only applies to the extremely wealthy, it can apply to anyone.
Inheritance taxes apply when the two primary beneficiaries of your estate are not blood relatives. If the cash or property in your estate exceeds the federal threshold, then your estate will be subject to federal estate tax.
If you don’t take steps to properly plan for your estate and your heirs, then you could end up leaving your heirs a much smaller inheritance than you expected.
If you’re in the middle of a divorce, then it’s important to ensure that you have a clear and concise understanding of what you need to do to ensure your estate is properly planned and your assets are protected. Beneficiary designations are an important aspect of estate planning, and they can have a huge impact on you and your family. Post-divorce beneficiary planning can help you accomplish all of these goals.
Dreyer Davison Lawyers LLP provides a divorce lawyer in Langley who can help you with your divorce or separation concerns. Let us assist you with your post-divorce beneficiary planning so you can spend more time focusing on other matters that are important to you. Schedule an appointment with us today!