Divorce is never an easy time. It can be a huge adjustment period for most people, but women, in particular, often find that they are affected most by the financial aspects of divorce. According to a report from UBS Global Wealth Management, 56 percent of married women leave control of major financial planning and investing decisions to their spouses. It’s no surprise, then, that many women find themselves financially overwhelmed when divorcing.
Although you may be dealing with a lot of emotion at the beginning of a divorce, it’s important to stay focused on certain issues, such as, your inevitably changing financial situation, especially if you have children.
While it’s easy to get caught up in taking care of the different aspects of your immediate financial needs, it’s arguably just as important (if not more so) to think about the future, and plan ahead. With National Estate Planning Awareness Week this week (October 15th – 21st), it’s a good time to tackle this often-overlooked task, and learn how to protect yourself (and your children), while avoiding these estate planning mistakes that divorcing women tend to make.
Not Reevaluating Their Will
Now that you’re divorced, it’s likely that your will needs to be reevaluated and updated. Divorces usually mean a change in assets, and a will needs to reflect those changes. If your spouse was listed as a beneficiary, you may also want to make changes there as well.
Not Revisiting Their Children’s Guardianship Plan
Nobody ever likes to imagine someone else raising their children. but this is a crucial, if unlikely, possibility to plan for, just in case. Without designating a guardian, there’s no telling who, with absolute certainty, would get custody of your children if you were to pass away.
If you and your spouse already created a guardianship plan before you divorced, it may be time to revisit this plan, if you have custody. The appointed guardian may be one of your former spouse’s close friends or family members, for example—a choice you may no longer be comfortable with. Now that it’s just you making these decisions. it’s more critical than ever to designate someone to take care of your children should you pass away before they’re adults. If you don’t want it to be your former spouse, it’s important to designate the person of your choice.
The bottom line: It’s your decision, and one that you want to make wisely, for your children’s sake.
Not Planning for All Assets
You may be entitled to a portion of your former spouse’s deferred savings plans, such as a 401K, IRA, or other eligible savings plan. Many divorcing women are unaware of just how many assets existed in their marriage and what they may be entitled to.
Once you’ve claimed your fair share, it’s important to know that you can designate beneficiaries (such as your children) for these plans, which is an essential part of your estate plan.
Failing to Incorporate Trusts Into Their Estate Plan
The future is unpredictable, and trusts can help protect your assets (and have them distributed according to your wishes) in certain situations. For example, your adult children might have creditor issues or get divorced. Putting a trust in place can ensure that your money still goes to whom you want it to go to after you pass. Trusts can also be used for other purposes, like deferring asset distribution until your kids are legal adults.
Failing to Plan at All
The biggest estate-planning mistake someone can make is not having a plan at all. AARP recently reported that an alarming 60 percent of Americans don’t have a will or estate plan in place. Many people are under the false impression that their next of kin will automatically inherit their assets, but this doesn’t always happen, and it’s not an easy process. When someone dies without a will or estate plan, their assets go through a costly and time-consuming process called probate. Your children, who are already grieving your loss, will have to spend a great deal of time and money on this process. This can cause them even more unnecessary pain and heartache. In the end, the laws in your state will determine who inherits assets when there is no will or estate plan in place, and the final decision may end up being against your wishes. Estate planning may be the last thing on your mind right after a divorce, but it’s more important than ever to make it a priority.
Not Seeking Help From a Professional
Many women who are new to the estate-planning process make the mistake of going at it alone. A financial advisor who is experienced in estate planning can be an invaluable resource during this time. Additionally, it’s crucial to enlist the help of an experienced estate planning attorney. Lawyer listing websites like Avvo and Justia can be a great place to start, and can allow you to narrow down your search by finding estate planning attorneys in your area who are highly rated.
Without the help of these professionals, it’s likely that you will overlook important aspects of the estate-planning process. Take comfort in knowing that your future, and your children’s future, will be taken care of according to your wishes by working with an experienced team.