Estate Planning During Divorce

I am going to reflect on my age and use the passing of beloved Gen X actor Shannen Doherty in July 2024. It offers powerful lessons about the importance of estate planning during divorce. Best known for her unforgettable roles in “Beverly Hills, 90210,” “Heathers,” and “Charmed,” Doherty faced her breast cancer diagnosis with incredible courage and determination. In her final days, she worked quickly to finalize her divorce and make sure her estate was protected — a reminder that timing and planning truly matter during life’s most difficult transitions.

The Power of Timing

According to reports, just one day before her passing, Doherty filed for an uncontested divorce from her husband, Kurt Iswarienko, who signed the agreement the following day. That timing turned out to be crucial. By finalizing the divorce, she ensured that her assets — including her Malibu home and residuals from her acting career — would be distributed according to her wishes rather than community property laws.

If the divorce had remained unfinished, things could have turned out very differently. In many states, when someone passes away before a divorce is finalized, the process is paused or even invalidated. In a community property state like California, that could mean a surviving spouse is still entitled to a substantial portion of the estate (½ of the community property accumulated during your marriage), leading to potential legal battles and family conflict.

 

Common Estate Planning Mistakes During Divorce

Doherty’s story underscores how critical it is to stay proactive. Many people unintentionally leave their families vulnerable by overlooking key estate planning details during divorce.

Here are a few of the most common mistakes to watch out for:

1. Waiting Too Long to Update Beneficiary Designations

It is easy to assume that a divorce automatically removes your ex-spouse as a beneficiary on your accounts or life insurance policies — but that is not always true. Some states automatically revoke those designations, while others don’t. And in certain cases, federal law can even override state law, especially employer-sponsored retirement plans. Without updating your beneficiaries, your ex could still inherit assets you intended for someone else.

2. Forgetting About Digital Assets

From streaming services to cryptocurrency, our digital lives hold real value. During a divorce, it’s important to address online accounts, photo albums, passwords, and digital property. Without clear instructions, loved ones may struggle to access important memories or valuable assets.

3. Neglecting Incapacity Planning

Divorce often shifts the focus to what happens after death, but it’s equally vital to plan for what happens if you become incapacitated. If your ex-spouse is still listed as your healthcare proxy or financial power of attorney, you may want to update those designations so the right people can make decisions for you. And if you would still want your ex to be designated as a trusted person, then you will want to refresh your documents post-divorce to indicate that you are choosing to keep them named.

4. Making Emotional Decisions

Divorce is one of life’s most emotional experiences. It is easy to make quick, reactive choices that might create complications down the road. Taking time to review your estate plan with a trusted advisor helps ensure your decisions reflect your long-term goals and values — not just short-term emotions.

 

Protecting Your Assets During Divorce

If you are navigating a divorce, here are three practical steps to protect your assets and avoid costly mistakes:

Step 1: Create an Asset Inventory
List all your property, bank accounts, retirement funds, investments, insurance policies, and digital assets. Identify what’s yours alone and what’s shared. This step helps ensure that nothing is overlooked during negotiations in your divorce or in your estate plan.

Step 2: Review and Update Beneficiary Designations
Check every account — from your 401(k) to your life insurance — to make sure your beneficiaries reflect your current wishes. Remember, these beneficiary designations usually override what is written in your will or trust.

Step 3: Update Your Estate Plan
Once the divorce is final (and even during the process), review your estate planning documents. This includes your will, trust, healthcare directives, and powers of attorney. Keeping them up to date gives you peace of mind that your wishes will be honored and your loved ones protected.

Your Next Step

Divorce can be emotionally, mentally, and physically draining. But it can also be an opportunity — a chance to rebuild your future on your own terms. Our goal at Tritch Buonocore Law is to make the estate planning process as supportive and straightforward as possible.

If you would like guidance on updating your estate plan during or after divorce, let’s talk. Together, we can make sure your wishes are protected, and your loved ones are cared for — no matter what life brings next.  Let’s make sure your planning and policies reflect your actual wishes, not just the defaults in fine print. We are available Monday-Friday at 480-525-6244, and always by email. We offer a complimentary 30-minute meet and greet for new clients.