Does Divorce Impact an Estate Plan?

December 6, 2022
A man and woman are pictured sitting at a table, both with their hands raised in a show of disagreement, while a third person, pictured in the background sits between the two, seeming to mediate.

The Changes That Come with the End of a Marriage

When a couple gets divorced, their estate plan needs to be updated. This is because the original plan was likely based on the assumption that the couple would always be together. Now that divorce is on the horizon, it's important to make sure your estate plan reflects your new circumstances. If you don't update your estate plan after divorce, you could end up with a lot of problems down the road. In this blog, read about the impact of divorce on an estate plan and how to make changes to reflect your new situation.

Changes to an Estate Plan After a Divorce

Understandably, divorce can have a significant impact on all aspects of life, including your estate plan. If you have gone through the process of creating an estate plan, it is important to review and update your documents after your divorce is finalized. Here are some key changes to keep in mind:

Beneficiary Designations

If you named your former spouse as a beneficiary on any accounts (life insurance policy, retirement accounts, etc.), be sure to update the beneficiaries to reflect your current wishes.

Guardianship

If you named your former spouse as the guardian for any minor children, you may wish to appoint someone new in their place.

Power of Attorney

If you named your former spouse as an agent under a durable power of attorney, you will need to appoint someone new.

Wills and Trusts

If your former spouse is named as executor or trustee of your estate, you will need to name someone new in their place. You may also need to make changes to the distribution of assets in your will or trust.

Ask for Help from an Estate Planning Attorney

If you have any questions about updating your estate plan after a divorce, contact an experienced estate planning attorney and ask for their guidance. They can give you the help you need to make the most informed choice for your future.

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Wills vs. Trusts in Michigan

Planning for the Future

Many people interested in estate planning are unsure of the difference between wills and trusts. While both instruments allow you to distribute your assets after death, there are some key differences between the two. Keep reading to learn the differences between wills and trusts in Michigan to make the best decision for you and your family.

Wills

A will is a document that directs how your property will be distributed after you die. You can use a will to:

  • Name an executor who will oversee the distribution of your property.
  • Appoint a guardian for your minor children.
  • Designate beneficiaries for your property, including family members, friends, charities, or organizations.

Trusts

A trust is another way to direct how your assets will be distributed after you die, but with some important differences from wills. Trusts can be revocable or irrevocable. Revocable trusts can be changed at any point during the settlor's lifetime, while irrevocable trusts cannot be changed once they are created. This means that with a trust you can:

  • Place conditions on how and when assets are distributed.
  • Avoid probate, which is the legal process of distributing a person's assets after they die.
  • Reduce or eliminate estate taxes.

Differences Between Wills and Trusts

While wills and trusts both allow you to direct how your assets will be distributed after you die, there are some important differences to consider. These include:

Probate

As mentioned above, one of the main advantages of using a trust is that it can help you avoid probate. With a will, your assets will go through probate after you die. Probate can be time-consuming and expensive, so avoiding it can be a major advantage.

Control

With a will, you have less control over your assets' distribution than with a trust. With a trust, you can place conditions on how and when assets are distributed, which gives you more control over what happens to your assets after you die.

Taxes

Another advantage of using a trust is that it can help you reduce or eliminate estate taxes. With a will, your assets may be subject to estate taxes when you die.

Work with an Estate Planning Attorney

Deciding whether to use a will or a trust is an important decision in Michigan estate planning. If you have questions about wills vs. trusts, or any other aspect of estate planning, contact an experienced Michigan estate planning attorney today.

October 11, 2022

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