People in California may have seen an interesting editorial article about how certain major, yet common, life changes can impact a person's financial well-being and future plans. This is especially true of people who have recently gone through a divorce. While most people are busy dealing with the emotional and personal fallout of a marital split, they may overlook the important long-term ramifications of a divorce, which could come back to haunt them many years in the future.
After a divorce, most people probably do not want their ex-spouse to continue to be the beneficiary of their financial accounts, life insurance policies, trusts and other benefits. However, unless people take deliberate steps to change these documents and name another beneficiary, this is often exactly what happens.
The same thing goes for a will. The will is the most important document a person has, in the event of their death as it controls the distribution of all assets. If a will names an ex-spouse as a beneficiary, as a matter of law in California, the divorce will generally exclude the spouse from collecting, under the assumption that the person intended to change the named beneficiary. Nonetheless, even if the ex-spouse is excluded, all property left to them will be distributed according to state probate laws. This could mean tens of thousands of dollars or more in unexpected legal fees and court costs, and, in the end, the property in the will may still not be distributed as desired.
Avoiding probate is one of the major benefits of a will, so it needs to be up to date based on life changes and desires at all times. People who want continued asset protection for themselves and their loved ones need to speak with an experienced estate planning attorney immediately, if they are anticipating or have recently gone through a divorce.
Source: Current In Noblesville, "Divorce can complicate your financial outlook," Joel Harris, July 15, 2014