Protect Your Financial Future
Maintaining your financial security, and that of any dependent children, is one of the toughest challenges you are likely to encounter when facing a separation or divorce. But once you have decided to divorce, there are a number of estate and gift tax opportunities and pit falls that may arise as a result of your new status as an unmarried individual.
As you go through the process, consider the following:
- Your children’s anticipated inheritance from you and your former spouse can be protected in the event that either of you subsequently remarries. Such protection can be achieved by using certain trusts.
- If you have done any irrevocable charitable planning, you may be able to divide your charitable trust or family foundation between you and your former spouse. Not only could this step provide you with the closure you desire, but also the opportunity to make future independent charitable choices without the need to consult your former spouse.
- Remember to coordinate the change of all beneficiary designations pending a divorce.
- If children are named as life insurance beneficiaries, and one parent dies, the other parent usually gains custody of the children. If so, the surviving parent (e.g., the ex-spouse) could control any money left to the children from life insurance. One strategy for dealing with this problem is to have the insurance policy payable to a trust for the children, or to a separate living trust that you control.
As with any estate planning issue, it is imperative to get the help of legal and tax professionals who are familiar with dealing with the unique circumstances that can arise from the division of marital assets.