Divorce and Estate Planning: What You Need to Know

By: Elizabeth Vaz, Esq. & Andrea Maldonado, Esq.

Date: November 17, 2025

Divorce can be a complex and emotionally challenging process, but it also presents a crucial time to reassess your financial and estate planning strategies. Many professionals suggest that you re-visit your estate planning documents periodically – which, of course, is a good suggestion- but rarely do we hear attorneys propose that you do this when getting divorced or separated. As you navigate the dissolution of your marriage, it’s essential to understand how divorce impacts your estate plan at various stages, and to take steps to protect your assets and your future. Here are some things that you need to know about divorce and estate planning.

1. The Importance of Updating Your Estate Plan

One of the most critical steps to take after filing for divorce is to review and/or update your estate plan. It is also important to understand that until a legal separation agreement is entered into with your spouse, or a Judgment of Divorce has actually been entered, you are deemed legally married from an estate planning perspective.  So many things are now different, so your future planning should reflect these updates. This includes revising your Will, Trust(s), Power of Attorney, healthcare directives, and all beneficiary designations. Failing to make these updates can lead to unintended consequences, such as an estranged spouse inheriting various assets.  And, although under NYS Law a former spouse is disqualified from inheriting from your estate, generally, acting as a fiduciary under your documents, and/or making medical decisions on your behalf (unless such designations were made in your documents after the divorce), not having updated documents and designations can lead to confusion, ambiguity, or even fraudulent activity, causing your surviving family and friends to be left to deal with the consequences.

Key Updates to Consider:

• Wills: Revise your Will to remove your ex-spouse as a beneficiary- or have them designated as a beneficiary on specific bequests if that is your wish. No matter what, make sure that your assets are distributed according to your new wishes.

• Trusts: If you have established any Trusts, amend the same to reflect any changes in your beneficiaries or trustees. Or, maybe you need to create a Trust and ensure that certain assets are retitled in the name of the trust.

• Powers of Attorney/Health Care Proxies: If your spouse is named as your agent for financial or healthcare decisions, consider appointing a trusted friend or family member instead. This documentation is not that complicated but if left undone, can lead to disastrous results.

• Beneficiary Designations:  While the designation of a spouse prior to a divorce may be disregarded on some accounts and retirement assets, this is not the case with all assets.  Additionally, even if they are disregarded, not having a contingent beneficiary listed can create further problems.

  
  

2. Understanding Property Division

In most divorces, marital property is divided between spouses, which can include real estate, bank accounts, investments, and retirement accounts. Understanding how your assets will be divided – by agreement, or by Order of the Court, is crucial for estate planning.

Key Considerations:

• Marital vs. Separate Property: Familiarize yourself with what constitutes marital property (generally, assets acquired during the marriage) and what is separate property (generally, assets owned before the marriage or acquired by gift or personal injury settlement). This distinction can impact how assets are divided in divorce and, accordingly, how they should be addressed in your estate plan.

• Valuation of Assets: It’s essential to accurately assess the value of your assets during divorce proceedings. This ensures a fair division and helps in planning your financial future post-divorce.

3. The Role of Life Insurance

Life insurance can be an essential component of your estate plan, particularly if you have children or dependents. During, and after, a divorce it is important to reassess your life insurance policies and your future needs.

Key Steps:

• Beneficiary Designations: Review and update the beneficiary designations on your life insurance policies to reflect your new circumstances. Your wants and needs will not be the same post-divorce. Consider naming your adult children or other family members, or a trust as beneficiaries, rather than your ex-spouse.

• Child Support and Alimony: If you are required to pay child support or alimony, consider securing these obligations with a life insurance policy. This can provide financial protection for your ex-spouse and for your children, in the event of your death.

  
  

4. Tax Implications of Divorce

Divorce can have significant tax implications that affect your estate planning. Understanding these implications is essential to making informed decisions. From real estate capital gain taxes to possible retirement distributions, having a fuller understanding here is extremely important. 

Key Considerations:

• Asset Division and Taxes: The division of certain assets, such as retirement accounts, can trigger tax consequences. Consult with a financial advisor or tax professional to understand the potential impact on your estate plan.

• Filing Status Changes: After divorce, your filing status will change, which can affect your tax liability. Be sure to consider how these changes might influence your estate planning decisions.

  
  

5. Children and Estate Planning

If you have children, your divorce will necessitate changes to your estate plan to ensure their well-being and financial security. And, what if you have step-children? These circumstances must be considered.

Key Actions:

• Guardianship Designations: If your children are minors, it’s vital to designate a guardian in your Will. This ensures that your children are cared for by someone you trust in the event of your (and their other parent’s) deaths.

• Trusts for Children: Consider establishing a trust for your children to manage and protect their inheritance. This can provide financial support for education and other needs while safeguarding the assets from potential mismanagement.

  
  

6. The Importance of Legal Guidance

Navigating the complexities of divorce and estate planning can be overwhelming. Consulting with legal and financial professionals can help ensure that your estate plan reflects your new circumstances and protects your interests. And please keep in mind that your divorce attorney may not be skilled in estate planning so having the right professional in your corner can make all the difference.

Key Professionals to Consider:

• Divorce Attorney: A divorce attorney can guide you through the legal aspects of divorce and help you understand how property division will impact your estate plan.

• Estate Planning Attorney: An estate planning attorney can assist you in updating your estate plan, ensuring that it aligns with your new goals and wishes, both during the course of a divorce and upon the finalization of the same.

• Financial Advisor: A financial advisor can help you assess your financial situation post-divorce and provide guidance on how to manage your assets effectively. Please note, however, that, generally, a financial advisor is neither a CPA, nor a tax expert. Be sure to ask them if tax advice is what you seek.

  
  

Conclusion

Divorce is a significant life change that necessitates a thorough review of all your documents, including your estate plan. By understanding the implications of divorce on your estate planning and taking proactive steps to update your documents, you can protect your assets and ensure that your wishes are carried out. Working with experienced professionals can provide the support and guidance you need during this challenging time. Remember, your new future awaits and protecting it is important. So, taking the time to reassess your estate plan now is an essential part of moving forward after divorce.

Contact:

Elizabeth Vaz, Esq. www.vazlaw.com 

Andrea Maldonado, Esq. www.emmlawgroup.com 

Photo by Katie Mukhina on Unsplash