8 Estate Planning Steps for Newly Single Clients

2. Update Beneficiary Designations

In the case of both divorce and the loss of a spouse, your newly single clients will need to update their beneficiary designations for IRAs, employer-sponsored retirement accounts, life insurance policies, bank accounts, brokerage accounts and annuities to ensure that their primary and secondary beneficiaries reflect their wishes.

This is especially critical in the case of a divorce to ensure that the client’s ex-spouse does not benefit from these assets in the event of your client’s death, and that their intended heirs are named as the beneficiaries.

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3. Revisit Wills

The death of a spouse or a divorce means that your client should revisit their own will to ensure that their assets are set to be distributed to their heirs in accordance with their wishes. In the case of a deceased spouse, your client will want to be sure that their assets are set to be distributed in accordance with your client’s wishes.

In the case of a divorce, it is critically important to ensure that the ex-spouse does not benefit from the will as was likely the case during the marriage. You will also want to review who the executor and the trustee of the will are to ensure that these individuals are still appropriate in light of the divorce.

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4. Revise Trusts

Trusts can be a very effective estate planning vehicle. In the event of a divorce or the loss of a spouse, your clients should relook at any trusts in place and make revisions as needed. In the case of a revocable trust, there should be no issues in changing the trust beneficiaries or the trustee. If needed the trust can be revoked, and your client can just create a new trust.

In the case of an irrevocable trust, making changes may be more difficult or impossible. It's important to ensure that your client speaks with an estate planning attorney to determine the best option for the trust and to accomplish their estate planning objectives. This might entail starting another trust or other options.

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5. Retitle Accounts and Other Assets

Assets may need to be retitled after the death of a spouse or a divorce. If the client’s primary residence was titled in the name of both spouses, your surviving spouse client will need to change the title to their name only. The timeframe and process will vary by state. The same applies to the ownership of investment accounts, bank accounts and other jointly owned assets.

In the case of divorce, the ownership of jointly owned property or other assets will be determined as part of the divorce settlement. Your client will want to retitle assets they retain, such as real estate, based on the settlement. In some cases they may need to transfer some assets to a new account in their name.

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6. Name Durable Powers of Attorney

A durable power of attorney names an agent or attorney in fact to act on your behalf in the event of disability or incapacity. Generally spouses will name each other as their agent on durable powers of attorney for medical care or financial matters.

After a divorce or the death of a spouse, your client will need to name another trusted individual as their agent on the power of attorney. They want to be sure that this is a person that they are comfortable will act in their best interest should they become incapacitated or suffer a medical emergency.

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7. Name Medical Powers of Attorney

Medical powers of attorney, also called health care proxies, allow your client’s health care agent to make medical decisions on their behalf if they are unable to do so. In the case of the death of a spouse or divorce, your client should review this document. In some cases they may have named an alternate agent in the event of their spouse’s death. Your client should ensure that this alternate is the person they want making these decisions and that this person is still willing to do so.

In the case of a divorce, your client will generally need to remove their ex-spouse assuming that this is not the person they want as their agent. They should consult with an attorney knowledgeable in these matters to determine what changes are needed after a divorce and how to implement these changes.

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8. Decide Guardianship of Minor Children

When a spouse dies and there are minor children involved, the surviving spouse will need to decide who they trust to act as the children’s guardian in the event of their own death or incapacity. This assumes that the deceased spouse was the parent or designated guardian of these children.

This may or may not be the case in the event of a divorce, depending upon whether the client’s ex-spouse is the parent of the minor children or is a part of their lives. Every family situation is a bit different, so be sure to discuss this with your newly divorced clients in cases where there are minor children involved.

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