If you are contemplating divorce, one of the things you might not be considering is how the divorce will impact your estate plan. However, without careful attention to these details, you can encounter unintended consequences. It’s crucial to review your trust arrangements during and after divorce, especially if you are a high-net-worth individual.
Understanding Testamentary Trusts in the Context of a Boulder Divorce
There are various types of trusts that you might consider to help manage your assets, including revocable trusts, irrevocable trusts, and testamentary trusts. Testamentary trusts are an interesting type of estate planning tool because they are incorporated into your last will and testament. They don’t go into effect until after your death, and your will must be probated for the trust to become effective.
Testamentary trusts can be helpful if you have minor children and you have specific wishes about how you want assets distributed to them. Your trust can provide instructions on how to distribute assets to your children. You name the trustee you want to manage on behalf of your named beneficiaries.
You can change the Colorado trust at any time before your death. However, the trust becomes irrevocable after it is created after your death. Forming this type of trust is often more affordable than administering a living trust, which can help preserve your wealth.
Does Divorce Automatically Revoke a Spouse’s Rights to the Trust?
If you get divorced, any designations you made in favor of your spouse as an executor, trustee, or beneficiary are automatically revoked in Colorado. Therefore, if you have named an alternate for these positions, the role would go to those individuals you named. Also, if you left provisions for your spouse’s relatives, the provisions in their favor would also be revoked. If you don’t want this to occur or if you want to keep your designations to your ex-spouse as your beneficiary, executor, or trustee intact, you should create a new will making this information clear.
Is There a Need for Manual Changes in Estate Planning Documents?
While your last will and testament is automatically altered after divorce as though your spouse pre-deceased you by a function of law, this is not the same for all estate plans. You must manually update estate planning forms that involve a designated beneficiary form, such as life insurance policies, retirement accounts, and bank accounts. You should also change living trusts, living wills, and other estate planning forms that previously named your spouse in a fiduciary role or role of trust. If you don’t, your ex-spouse may have power to make healthcare and financial decisions on your behalf that you would not knowingly entrust them to.
What Steps Can I Take for an Upcoming Boulder High-Asset Divorce?
Some of the steps you should consider taking if you anticipate a high-asset divorce include the following:
- Review and update your estate documents.
- Communicate with trustees about your wishes.
- Reassess your asset protection needs.
- Engage legal counsel early in the divorce process.
Choosing a trusted legal team can make all the difference, so consider connecting with Stahly Miner LLC to ensure your rights and long-term financial interests are fully protected.
Contact Stahly Miner LLC For Help with Your High Asset Divorce Today
Divorce can impact your beneficiaries and designations of your executors and trustees. Our experienced divorce attorneys can review your documents and explain if you need to update them. We can also recommend if you should employ other assets protection strategies. Proactive legal planning can protect your wealth and ensure your post-divorce needs are considered. Contact us today to arrange a confidential consultation at (855) 963-4968.