If you are getting a divorce from your spouse, you have a lot of planning to do. You will need to name your own beneficiaries, organize your divided assets, and set up your individual property. It is vital that you meet with a qualified attorney to discuss the specifics of planning your estate to ensure that your wishes are to be implemented as you desire.
You need to be well-versed in the most strategic methods of partitioning your jointly owned property so that you do not end up burdened with all of the taxes while your ex-spouse enjoys all the added benefits of your marital resources.
We have outlined some significant information for you to be aware of when allocating your assets after your divorce. Keep in mind that divorces often lead to new arrangements for the parties. You will want to meet with a qualified lawyer to discuss how to best protect your downsized estate.
During the marriage, it is likely your spouse was the sole or principal beneficiary of your assets. After your divorce, you should designate a new beneficiary on all of your documents and for all of your accounts. The federal statute named ERISA pre-empts state laws that would otherwise automatically remove an ex-spouse as the beneficiary of a retirement plan. Hence, it’s essential that you remove the ex-spouse as ultimate beneficiary unless you want him or her to remain as your designated beneficiary.
Be aware that even if you designate a new beneficiary, it is possible that your ex-spouse may still retain the rights to part of your retirement benefits that you accrued during the time of your marriage. We recommend consulting with a qualified estate planning lawyer to calculate just how much of your assets may be awarded to your ex-spouse after your divorce. Dividing Marital Assets.
During the course of the divorce, you and your ex-spouse should determine how your jointly-owned assets should be split. Take time to review the assets that you will need to divide, particularly: 1) appreciated assets such as mutual funds, and securities; 2) real estate, including investments, repairs, assurances and mortgages; 3) personal assets, such as jewelry, artwork and clothing; 4) retirement plan, such as qualified plans and IRA’s; and 5) your residence and recreational properties home, which can be allocated in different ways to meet the needs of the parties and the family.
Creating Trusts. Many parties will draft a Trust or Trusts so that designated Trustees will have control over these assets even after the deaths of the parties. There are three Trusts that you can explore when planning your estate: 1. A Revocable Living Trust helps to avoid probate by allowing your Trustee to distribute your resources according to the instructions that you have outlined. 2. A Children’s Trust allows you to designate monies that your children will use afterward in their own lives to pay for their education, first home and the like. 3. An Irrevocable Life Insurance Trust, otherwise known as “ILIT”, allows you to distribute the death benefit estate tax-free when and how you want, even long after you’re gone.
Divorce is never easy. It’s often a longer and arduous process as both parties work to get their portions of the shared resources. If you’re going through a divorce it is important to speak with a qualified lawyer who can walk you through all of the tax and asset considerations that you need to be aware of to ensure that you receive the best possible resolution for you and your family.