There’s a lot to consider when it comes to estate planning — especially if you are a divorcee; here are estate planning mistakes to avoid.
If you overlook key components of your estate plan and how they work with your divorce, you could make a mistake that could cost you more than it’s worth.
But how do you know if you’re making estate planning mistakes?
Larry Heller, CFP® recently spoke with Keren Birnbaum, Esq. on the Retire Right podcast to find out the answer to this question. Keren shared 10 common estate planning mistakes divorcees frequently make. Read on to learn what some of them are!
1. Not Having Estate Planning Documents to Begin With
One of the biggest mistakes you could make, no matter which stage of divorce you’re in, is not having an estate plan at all. This means having no power of attorney, no listed beneficiaries, and no healthcare proxy.
If you don’t have an estate plan in place, there could be major consequences if you pass away.
For example, whether you’re divorced or not, if you’re married in the state of New York and you have children and you pass away, the state of New York will go ahead and write a will for you.
What do you think the chances are that they will divide and pass on your estate the way you want them to?
So, if you don’t have any estate planning done yet, it might be time to get one before it’s too late.
2. Not Updating Your Estate Planning Documents
Once you have estate planning documents in place, you can’t just set them aside and forget about them. Another common estate planning mistake is failing to update your documents.
Why? Because life is always changing, and you want your estate planning documents and power of attorney to reflect those changes.
You likely won’t want your ex coming back to you saying I want X, Y, and Z, and they get it because you hadn’t updated your beneficiaries since you were married.
3. Not Updating Beneficiary Designations, Retirement Accounts, and Insurance Policies
In most cases, divorcees believe their will governs everything.
The reality is, they don’t.
Even if you update your wills, you need to also update your beneficiaries. Why? Because that’s what the law goes by first.
If you are unsure who is named as the beneficiary on your accounts, it is recommended that during the divorce process, you go back and check your beneficiary designations and keep a running list.
That way, you can checkmark what needs to be updated.