Many divorce clients consider estate planning to be something to tackle after they have completed and finalized their divorce. After all, there is enough work to do during the divorce process. However, your old will and beneficiary choices likely name your soon-to-be-ex-spouse and may not make sense for your new life. If you wait until after the divorce, your ex may still be in line to inherit or control assets, serve as healthcare proxy, or manage money for your children if something happens to you.
Divorce is a key estate planning moment
Major life events generally mean you should review your estate plan, and divorce is no exception. Some updates to make to your estate plan during divorce are obvious: Make a new will with new beneficiaries. Name a new executor or trustee if your spouse is now assigned those roles. You may want to change your healthcare proxy, if you don’t want your ex to make medical decisions for you in an emergency. It’s also important to change the beneficiary designations for assets that pass outside your will, such as retirement accounts, life insurance plans, annuities, and stock or bank accounts. To do this, contact the financial institutions and insurance companies directly. Finally, work with your spouse to name a guardian and trustee for children who are under 18, or review your current choices in light of your pending divorce.
Planning together for minor children
Parents can fund a Uniform Gift to Minors Account (UGMA) or Uniform Transfer to Minors Account (UTMA), or similar investment accounts to reduce future conflict about paying for college. These accounts earmark assets for college education and living expenses and earn interest over time. You and your spouse may decide to use a joint asset to fund a UGMA or UGTA instead of dividing the asset with the other marital property. If you do this, you are each contributing equally to the account without having to make regular payments that may be difficult on a tight budget. Keep in mind that UGMA or UGTA accounts are irrevocable and are transferred to the child at age 18 or 21.
Planning for children with special needs
A Special Needs (or Supplemental Needs) Trust allows parents to set aside funds for a disabled child who qualifies, or is likely to qualify for, government benefits. Benefit programs, such as SSI, SSDI and Medicaid, are available to people with low incomes and minimal assets. But funds in a Special Needs Trust can be used without jeopardizing the child’s eligibility for such programs.
This kind of trust is sometimes set up when one or both parents die, according to their wills. However, there are benefits to creating a Special Needs Trust while parents are getting divorced. As part of the divorce agreement, both parents commit to putting some assets into the trust, to jointly create a fund for the care of their special needs or disabled child. While each parent could create a separate Special Needs Trust for the child, committing to funding it during the divorce demonstrates a cooperative plan for their child’s lifelong care and ensures that both sides contribute to future expenses.
Life insurance trusts can lower your estate taxes
It’s standard practice for divorce agreements to require each parent to maintain life insurance in order to guarantee that child support will be paid. Divorcing parents agree to name each other as the beneficiaries of their life insurance policies until the children are emancipated (for those who go to college, it’s usually when they graduate or turn 22). This way, if one parent dies before his or her child support obligation has ended, the insurance policy can pay what’s left.
For estate planning purposes, however, it may make sense for both parents to extend coverage beyond the children’s emancipation until the parents die. Placing a life insurance policy into an irrevocable life insurance trust (ILIT) can keep the policy’s value out of a parent’s taxable estate while providing a tax-efficient inheritance for the children.
Protect assets by reviewing your estate plan again after the divorce
New relationships, stepchildren, and blended families change both your legal obligations and your emotional priorities, so an outdated estate plan can send your assets to the wrong people and create serious conflict. Reviewing and revising your documents is how you protect everyone you care about and make sure the law follows your actual wishes—not assumptions.
If you remarry and do not update your plan, your new spouse may end up with most or all of your estate, leaving children from a prior relationship with less than you intended—or forcing them into a legal dispute with your spouse. A tailored will or trust can split assets between your spouse and your children, or use trusts to provide income for your spouse during life while preserving the principal for your children later.
Working with an estate planning attorney
Updating your estate plan ensures that your legal documents match your new financial reality and long-terms goals when you get divorced. Thinking about estate planning during divorce can be overwhelming, but an experienced estate planning attorney can make the process easier. At Kelly & Knaplund, we use our expertise in divorce law and estate planning to implement your wishes, minimize your taxable estate and care for your family.
This blog post is for general information only and is not legal advice. For guidance on estate planning during divorce in Westchester and surrounding counties, consider speaking with our experienced family law and estate planning attorneys in White Plains, NY.
Copyright (c) 2026 by Mary F. Kelly, Esq.
