Divorce can be very rough on the individual and their family. If you already have an estate plan in place, it is certainly time to review it after a divorce. After all, do you really want your ex-spouse making health care decisions, handling your estate for you, or having access to your accounts?
However, if you don’t have an estate plan, it may be an excellent time to establish one after your divorce to protect yourself and your loved ones. Single people are especially vulnerable without a plan in place.
Let me tell you a story:
John came to me shortly after his divorce. He wanted to find out if doing an estate plan made sense for him. Like most people, he figured estate planning is only for rich people (which is the biggest mistake most people make – do you ever wonder how reach people stay wealthy?).
I explained to him that estate planning deals with many issues, most having nothing at all to do with the amount of wealth one has or estate tax issues. It’s about protecting oneself and one’s family using the legal tools available to all, irrespective of wealth. I asked him, “What legal documents do you have in place in the event something happened to you? How will people be able to help you?”
John then explained why he got a divorce. There were many reasons, but the main reason was that John’s ex-wife always spent all their money, just as soon as it was deposited into their bank accounts. She did not believe in saving money and spent far more than they could afford. Financial problems often lead to divorce, and John’s marriage wasn’t immune.
Then John asked me the common question: “What if I do nothing at all?”
I explained that if he did nothing, California law would dictate what happened to his estate. If he remained unmarried, his estate would end up going to his 8 year old daughter. He seemed very relieved to hear that. However, I explained that a minor child can’t own real estate, and a life insurance company certainly won’t write a check to a minor. Also, during and after the probate process, the court would insist that any inheritance going to John’s daughter be managed by her guardian.
Then I asked a question: “Who would likely be your daughter’s legal guardian if you died?”
There was a silence.
Then he said, “Oh my God…my ex-wife would control everything!” And I added, “Yes, and anything left (if anything) would go to your daughter at age 18 so her no-good boyfriend could steal the rest.” Of course, there is no boyfriend in her life yet, but some people stand in line to be a boyfriend/girlfriend when there is money involved.
Needless to say, John quickly appreciated the need to establish an estate plan to protect his daughter…to make sure her inheritance was handled properly (and out of reach from his ex-wife). By the way, this story is not intended to malign the ex-wife as the roles could easily have been reversed.
In addition, we made sure John had a solid Durable Power of Attorney and Advance Health Care Directive to further protect him and his estate.
Robert Mansour is a Wills & Trusts Attorney in the Santa Clarita area (serving Valencia, Saugus, Canyon Country, Newhall, Stevenson Ranch, Castaic, and beyond). Call today to see how an estate plan might help protect you and your loved ones after a divorce. Don't leave things to chance.