Divorce can be quite difficult for a number of reasons. Aside from the basic stress and emotion involved with separating your union, there are a lot of other tasks and things to consider. Younger couples may be worried about whether their children are okay and how they will split custody. Older couples may be preoccupied with things such as retirement plans, trusts, inherited assets, and estate plans. So, how can your divorce impact your estate plan? Here’s what to know.
Division of Assets
Division of assets can prove difficult in any divorce. This is even truer when it comes to couples who have accumulated a lot of joint and/or separate assets. Often times a couple will possess a family heirloom that has become commingled property. This can make equitable division even more difficult.
Other assets that a couple may have to divide include their financial assets. This may include things such as life insurance policies, retirement accounts, and pensions. While one person may want to be spiteful or immediately get the other person off of their accounts as beneficiary, doing so without an understanding of how this could impact you can be detrimental to your taxes and finances. This is where a qualified estate planning attorney can help. Since divorces can cost a lot of money, they often deplete resources.
As briefly mentioned, how you handle your uncoupling can have tax implications. One obvious one is how you file your taxes. Once divorced you will have to file your taxes individually rather than jointly, which can have an impact on your tax planning options. Since the marital home is generally the most valuable asset they care, transferring ownership from both people to one spouse could impact their capital gains tax when the property is sold. This is because the home’s value will likely have increased over the years, and the personal residence exclusion which is less for an individual than for a couple.
Long-term Care Planning
For older couples, divorce can have a direct impact on their long-term care planning. If either spouse was in the process of transferring any assets out of their names and into a trust, it could impact each spouse’s Medicaid benefits eligibility.
In the state of Virginia, if you created a will before you get a divorce, any gift that you made to your ex-spouse in that will is automatically revoked by the divorce. Additionally, should you have named your ex-spouse as an executor of any part of your estate, that will also be automatically revoked upon divorce.
In some states, when a divorce is final, all provisions and bequests to the former spouse in the other spouse’s last will and testament are revoked. If either had their former spouse named as an agent in a power of attorney document or an advance health care directive, then that is also revoked. During the divorce process, the divorcing spouses will want to redo any estate planning documents that name the other as an agent.
The easiest way to account for the revocation of your ex-spouse concerning your estate plan is by revoking your old will and creating a new one. You can do this by shredding or burning your will and/or by putting in the new will that you are revoking all of the prior wills you had.
Surovell Isaacs & Levy PLC Can Help Those in VA Who Wish to Amend Their Estate Plan
If you are considering divorce or are going through a divorce, it’s important to consult with an estate planning attorney who can help you to navigate the divorce process and the impact it has on your estate plan. The point of an estate plan is to ensure that you define what is in your best interest as well as what’s in the best interest of your loved ones. That’s why it’s important to speak with a knowledgeable and experienced Virginia estate planning attorney.
At Surovell Isaacs & Levy PLC, we have experience with estate planning law and specifically with issues surrounding divorce. We will help you to fight for what it is that you deserve. To learn more or to schedule a consultation, contact us today!
Posted in: Estate planning/Trusts