Balancing Personal and Business Interests in Your Estate Plan Post-Divorce

Why Is It Important to Revise Your Estate Plan After a Divorce?

If you created an estate plan during your marriage and failed to revise after your divorce, you could be granting your former spouse decision-making powers and rights to your assets. It is essential to change your will or revocable trust and to update your beneficiaries for life insurance and financial accounts. It is equally crucial to re-draft healthcare directives and powers of attorney to prevent your ex-spouse from retaining powers to make vital decisions on your behalf. As divorce involves the division of marital assets and debts, your property ownership will be different, and your estate plan should reflect those changes.

What Steps Should You Take to Update Your Estate Plan After a Divorce?

Revisiting your estate plan post-divorce may seem like a daunting task. Taking the following steps can help simplify the process:

• Determine what your assets are and how they are titled: This can lay the foundation for smoother estate plan revisions.
• Revoke your existing will and make a new will: Creating a new will after a divorce can help ensure your assets will be distributed according to your wishes. It allows you to designate new beneficiaries, make other adjustments, and gain control over your estate plan.
• Update guardian provisions if necessary: If you have custody of minor children, it is important to review the guardian provisions of your estate plan after a divorce, particularly if you believe your former spouse is not suitable for guardianship. In that case, detail your concerns, provide evidence, and state specifically in your estate plan who you want to assume custody and care of your children.
• Name new beneficiaries: Most married couples designate their spouses as beneficiaries on various financial accounts. After a divorce, it is essential to update beneficiary designations for bank accounts, investment accounts, retirement accounts, digital assets, health savings accounts, and flexible spending accounts.
• Change powers of attorney and healthcare proxy: A power of attorney grants authority to another person to act on your behalf under the Florida Statutes, Title XL, Chapter 709. It is crucial that you revoke any power attorney naming your former spouse as your agent and appoint a trusted friend or family member instead. This also applies to your healthcare proxy or medical power of attorney.
• Carefully review prenuptial or postnuptial agreements: Under the Florida Uniform Premarital Agreement Act, before marriage, prospective spouses may enter into an enforceable contract pertaining to property rights, spousal support, life insurance policies, and any other matter, provided it does not violate public policy or criminal law. If you and your spouse had a prenuptial or postnuptial agreement in place, it is crucial to review it carefully, as it may contain terms that impact the structure of wills, trusts, and other estate planning vehicles.
• Consider placing assets in trust: Trusts could play an important role in your updated estate plan. They can be flexible tools that give you specific control over asset distribution, including when beneficiaries receive assets. Depending on how they are structured, trusts can also shield assets from lawsuits and creditors and ensure your former spouse does not gain control over assets intended for your children or others.

How Do You Factor Business Interests into a Post-Divorce Estate Plan?

Estate planning can be a complex process that requires consideration of family dynamics, tax laws, estate size, and business and personal circumstances. One way to start the process is to create a personal balance sheet and determine which personal assets will require appraisal for valuation and which will not.

Business assets can be more difficult to value for purposes of equally dividing assets among heirs. Business appraisers may use any of three different approaches to value interest in a privately held business:

• Asset-based: Business assets and liabilities are restated from historical cost to fair market value.
• Market: Valuation ratios taken from market transactions involving similar companies are used, as well as past transactions involving the business.
• Income: Estimated future returns are discounted to present value at a rate of return appropriate for the investment.

Can It Be Beneficial to Relocate Assets to a Business Structure?

If you are a sole proprietor or have a large portfolio of marketable securities or real estate, it may be advantageous to move these assets into a business structure. Popular options for family business structures include limited liability companies (LLCs) and limited partnerships (LPs). The benefits of relocating assets into this type of business structure include asset protection and greater asset control.

Putting a buy-sell agreement into place can be a critical estate planning step. Family business LLC and LP agreements commonly contain provisions that limit the sale or transfer of business interests to non-family members. Buy-sell agreements can help keep business interests within the family.

Get Help from an Experienced Orlando Estate Planning Lawyer

Revising an estate plan can be a complicated process, particularly when you are balancing personal and business interests after a divorce. It makes sense to seek sound legal guidance from an experienced Orlando estate planning attorney. At The Law Office of Erin Morse, we focus our practice exclusively on estate planning and family law matters. We can analyze your situation and provide comprehensive protection for you and your family. If you are recently divorced and need to update your estate plan, contact us at (407) 743-6059.