In a surprise announcement, legendary quarterback Tom Brady and internationally famous supermodel Gisele Bündchen declared their divorce was final last month. While it was not publicly known that the two were in the process of ending their marriage, there had been rumors since the summer that Gisele was unhappy with Tom about his decision to return to playing football. The couple’s announcement immediately led to speculation on how they will divide their $733 million in assets.
This is an excellent question. The couple received permission from the court to refrain from filing their financial disclosures and divorce settlement publicly to protect their privacy, so the exact details aren’t known. Neither are the specifics of how they will adjust their estate plans going forward.
This is an essential but often-overlooked element of moving on after a divorce. It is challenging to ensure that your final wishes are respected without an updated estate plan. If you’re going through a divorce, there’s no better time than the present to start preparing a new plan. Keep reading to learn how a divorce may impact your estate and will and how to revise your plans after ending your marriage.
The Impact of Divorce on Estate Planning
When you get a divorce, your entire financial situation changes. Unless you are already legally separated, you and your spouse will divide joint assets according to California’s community property laws or your prenuptial or postnuptial agreement. In the process, the property you have the right to bequeath in your will or place in a trust may change dramatically.
This alone may make your estate plan no longer accurate. Any bequests in your will for the property you no longer own will be considered void. As such, your beneficiaries may receive significantly less than you intended.
In addition, many married couples structure their estate plans on the assumption that one spouse will outlive the other. They name each other as their primary beneficiary in all things. However, getting a divorce doesn’t automatically change details such as beneficiaries in a will. If you do this before you divorce and do not update your will afterward, your ex-spouse will receive your entire estate should they outlive you. Similarly, if you don’t change your Power of Attorney, your ex-spouse may be responsible for making medical and financial decisions on your behalf should you be incapacitated.
This is why updating estate plans is critical after a divorce. Suppose you don’t revise your will, life insurance policies, trusts, and other documents. In that case, they cannot reflect your new life circumstances and preferences, which may create significant legal complications for your loved ones.
How to Revise Your Estate Plan Post-Divorce
Revising your estate plan should be done regularly. However, the first revision after your divorce will likely be significantly more involved than a standard review. Here are a few of the most important details you need to address to ensure your final wishes are clear and legally actionable.
Update Your Will
First and foremost, carefully review your will after your divorce is finalized. You’ll likely need to significantly update your bequests to reflect your new financial status. This ensures you aren’t trying to give away assets you no longer own.
You may also choose to remove all mention of your ex-spouse from the document. At a minimum, you will likely need to update language that leaves your entire estate to them upon your passing.
Name New Beneficiaries
Depending on the extent of your estate plan, you may need to update your beneficiaries on multiple documents. For some people, this is as simple as naming new heirs and alternate beneficiaries in their wills. For people with more significant estates, however, it may also require updating life insurance policies and trusts.
Review Your Powers of Attorney
Next, check who you have granted Powers of Attorney should you be incapacitated. If your ex-spouse has any of these Powers, you can revoke them and give them to someone new. This ensures that the person who makes decisions for you should you be incapacitated is trustworthy and knows you well.
Consider Guardianship of Your Children
You may want to draft guardianship documents after your divorce if you have young children. These documents help determine how child custody will be handled in the event of your death. They are always helpful, but they are critical if you receive sole custody of your kids. That indicates that your co-parent may not be fit to raise the children after your death.
If you don’t want them to receive custody, say so in your guardianship papers and name another guardian instead. Include a list of grievances about your ex-spouse’s behavior regarding your kids. While these papers don’t automatically prevent your ex-spouse from receiving custody should you pass, the court will consider them and determine if it is in your kids’ best interest to obtain a different legal guardian.
Create a New Estate Plan for Your New Life
With net worth as high as Tom and Gisele’s, they almost certainly had a joint estate plan in place before their divorce to determine how their assets should be divided, and their children cared for in the event of their deaths. Now that the split is finalized, they must create individual plans tailored to their new circumstances or risk having their estates tied up in probate court for months or years after they pass. If you’re going through a divorce, you should do the same. A compassionate, knowledgeable estate planning attorney can make all the difference. At CC LawGroup, we have decades of experience helping clients like you navigate divorce and update their estate plans to reflect their new lives. We understand how stressful the process can be, and we work closely with you to streamline the process and help you move on with your life as quickly as possible. You can discuss your concerns with Cynthia Cho, our expert Newark family law and estate planning attorney, by calling (510) 402-1579 or messaging us online today.