Nolo's Essential Guide to Divorce - Emily Doskow [168]
If the retirement benefits you split were in the form of IRAs or other assets that don't require a QDRO for distribution, you still need to make sure that the division happens. You can't just change the title on an IRA account, or have a check written to you which you then cash or endorse to pay your ex-spouse. You'll be taxed on the money, and penalized for withdrawing it early if you're not yet 59~h. Ask the trustee how to properly roll over the money into another IRA in one spouse's name. See Chapter 10 for more about this.
In addition to buying life and disability insurance that would cover spousal and child support in the event of the paying spouse's death, if you are expecting retirement benefits in the future, make sure the life insurance benefit also covers the value of the retirement benefits. Otherwise, if your former spouse dies before retirement, you might lose out.
8. Update Your Will, Trust, and Power of Attorney
If you haven't yet made a new will, do it immediately. Any will that you made during your marriage says that you are married and, most likely, leaves your property to your ex-spouse. In some states, divorce voids provisions in your will that leave property to your ex-but not all states have this rule, so don't count on it. Even if you still want to leave something to your former spouse, you need to change your will to state that you are a single person and restate your intentions.
Make sure you wait until the divorce is final. If you do want to provide for your now ex-spouse in your will, don't make the new will until your final judgment has been entered, officially ending your marriage. If you make the new will before that official date, it may be automatically revoked in short order when the judgment is entered.
If you hold any separate property in trust, you may have already taken the property out of the trust during the divorce. In any case, review the trust document and amend it if necessary. You may want to check with the lawyer who prepared the trust.
If you signed a Power of Attorney for finances, giving your ex-spouse the right to make financial decisions for you if you're unable to take care of your own affairs, make sure you destroy it. The same goes for a Health Care Directive that names your ex.
Don't procrastinate. The law books are full of cases resulting from arguments between current and former spouses about a person's intent to leave money or property to one or the other. Do your family a favor and be clear about your wishes after your divorce.
There are lots of resources to help you with estate planning. Whether you want a book, software, or an online will preparation service, there are plenty out there. Many can help you figure out whether you need a lawyer or can prepare your simple will on your own, and some can help you work with a lawyer, too. Here are some of the best:
Quicken WillMaker Plus (Nolo) is interactive software that takes you through a series of questions and then produces a valid will tailored to your state. The program also contains powers of attorney and simple trust documents.
Nolo's Online Will is a way to make a will online using interactive tools. www.nolo.com.
Nolo's Simple Will Book, by Denis Clifford (Nolo), lets you choose from seven different will forms or build a custom will.
8 Ways to Avoid Probate, by Mary Randolph (Nolo), explains how you can take advantage of important-and often overlooked-probate-avoidance strategies.
Make Your Own Living Trust, by Denis Clifford (Nolo), explains how to create a living trust, transfer property to the trust, and amend or revoke the trust.
9. Confirm That All Bank and Credit Accounts Are Separated
You have probably already closed all your joint bank and credit card accounts, but if there are any left over, take care of them. All you need to do to divide a bank or brokerage account