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1. Develop a List of Everything You’ve Accumulated
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In order to understand what needs to be accounted for, a list of the estate must be developed. It is important for everyone to do this anyway, but when separating the estate, understanding what clients have clears up how to divide it. We wouldn’t assume that a court is involved, but if it was, an asset list would certainly need to be provided. What isn’t required on a court-mandated list of assets, however, are the emotional ones. Items that are valued as personal by your client may still require division. It is imperative to inventory everything.
2. Find Out What Clients Can and Cannot Alter
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While your client may or may not be able to alter beneficiary designations or survivor pension benefits immediately, it is important to understand what applies to whom. You will need to look at trust setups to see if they can be amended before or after the divorce. It is best to seek guidance in determining what your client can immediately change and what can be amended following the divorce. Typically, a divorce that is proceeding through the courts will place a restraining order on your client’s assets. Stay engaged and make changes as soon as possible. Look at your client’s prenuptial (or postnuptial) agreement, as they will have an impact on how items are split.
3. Protect the Children
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If your client has minor children, it is important to consider all the scenarios, including guardian and agent appointments and how to provide access to information should something happen. Custody can create challenges, but not having documents amended can cause even more trouble should something happen. If the estate is subject to tax or generation-skipping taxes, more planning will need to be done following the divorce. Estate planning is just as important for people with minor children as it is for senior citizens.
4. Update Your Documents
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Chances are your client has a health care proxy, power of attorney, living will and other applicable estate documents. It is safe to say that your client’s spouse or significant other is named in those documents and may be the decision maker. This may no longer be what the client wants in the event of a divorce (for obvious reasons). Remember to update HIPAA documents. It is imperative to consider all the options when naming new agents, guardians, executors or trustees. If your client has a revocable trust, make amendments as soon as possible. Select a new beneficiary designation on assets such as IRAs, life insurance policies and other applicable assets. Make sure to attend to tangible assets by re-titling real estate, cars and other jointly named hard assets.
5. Don’t Forget the Often-Overlooked Items and Issues
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Change passwords on all online accounts and other valuable access points. Notify service providers, such as electric and power, that a spouse is no longer attached to the account. Have your client contact her employer’s human resources department. Change the locations of personal papers and items. Change beneficiary and access points for digital assets, such as domains, Facebook, Twitter and other monetary and sentimental accounts. Consider trusts as buffers from ex-spouses; they can provide valuable protection. And be sure to revisit the plan after the divorce is finalized.