If you are concerned about estate planning and retirement, you may also want to know how divorce could affect your future.
Divorce might be the last thing you think about when you and your spouse are establishing your estate planning. As uncomfortable as it may be, it would be wise to take into consideration the many ways a divorce might put a crimp in your future financial plans.
Begin by developing your estate plan with the assistance of a law firm so that you can be assured that you are making the wisest decisions possible. Professional legal aid can help with the unintended consequences of a divorce on your estate planning.
Living Trusts/Living Wills
Your estate-planning lawyer can advise you on whether you need a living trust or a living will; these can be determined based on your needs and those of your family, as well as number of assets. If you have set up a living trust prior to getting married, any existing assets will be treated as your own separate property in the case of a divorce.
If a Divorce Should Happen
Should you divorce, it is imperative that you update beneficiary designations on financial instruments such as life insurance policies, stocks, bonds, and other assets. Bear in mind that options for change may be constrained by your divorce decree.
Your lawyer can help you determine which assets can be assigned new beneficiaries. In general, you should have all estate-planning documents reviewed.
Unintended Consequences of a Divorce
Consider this scenario. Say you have created an estate plan that leaves everything to your spouse and subsequently your children if you die. If you then divorce, Missouri business law treats your ex-spouse as if they are now deceased. If you subsequently pass away, the provision giving everything to your ex-spouse will no longer be valid. Your estate will now go to your children. However, if your children are still minors, your assets will go into probate, which is not in the best interests of your children. It may be years before your children see any of the assets, and you can be assured that the state will take its significant share before that happens. Having a living will can prevent this tragedy from occurring.
Estate Planning: Divorce and Retirement
Divorce can also affect your retirement plans. Pensions, 401K’s, IRA’s, and Social Security can all be impacted by your divorce. There are a number of terms that can be negotiated in your divorce proceedings to maximize the best outcome for you and your ex-spouse.
There are options on pension negotiations. For example, a spouse can buy out the entire pension amount. Another option is determining the value of the pension, awarding it to one spouse and giving the other spouse equally valuable property assets.
401K’s and IRA’s
Again, negotiations can be reached such as awarding the entire account to one or the other spouse. If it is your fund and you began paying into the account before getting married, you are entitled to at least a partial award.
It is important to know that your ex-spouse may receive benefits from your SSN earnings if you were married for at least ten years. Your spouse must be at least 62 years old and not be remarried, and not be entitled to his or her own SSN benefits.
Who Do You Call?
The professional staff at Appleby Healy Attorneys at Law are here to help you with everything you need to know to set up your retirement and estate planning. If you have not yet married, they can advise you on your best options to protect your financial future. If you are married and a divorce enters the picture, you may want to revise your estate planning documents to optimize your financial worth. Without this professional advice, a divorce can wreak financial havoc on your family.