In his most recent column for Financial Advisor Magazine, Joe Cordell, Principal Partner and Founder of Cordell Planning Partners, explained what role a financial advisor can play in post-divorce estate planning.
Creating an estate plan can ensure that all the pieces of an individual’s estate are distributed promptly to the proper beneficiaries while minimizing the probate process.
However, certain life events, such as a divorce, can alter circumstances and warrant an adjustment to how the estate is divided. Unfortunately, many divorcees neglect to update their plans.
“Whether they thought their ex would automatically be removed upon the nullification of their marriage or they simply forgot, failing to update an estate plan after a divorce can have some very unfortunate consequences,” Mr. Cordell wrote.
Following a divorce, it is crucial for financial advisors to work closely with estate planning attorneys to determine an appropriate strategy that will best fit a divorcing client’s needs.
Mr. Cordell noted that it is important for both the financial advisor and attorney to understand their limitations and rely on the other’s skills and expertise when appropriate.
Furthermore, it is crucial to update the beneficiaries on basic accounts such as life insurance policies, 401ks and investment accounts as it is common to list a spouse as the beneficiary while married. The same is true of wills and living trusts, which could require additional consultation with an estate planning attorney depending on the circumstances.
“A financial advisor’s role should be to ensure their client is aware of the significance of proper estate planning, to do what can be done to assist with these matters and to refer them to a specialist to discuss the drafting of more technical aspects of their individualized plan,” Mr. Cordell said.
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