By Melissa Montgomery-Fitzsimmons, Director of Wealth Planning at First Western Trust

After the fireworks comes the paperwork.

The legal and financial paperwork brought about by a divorce can be as overwhelming as the emotional strain, with all of the deeds, decrees and debts that need to be re-organized, re-titled and implemented into your life as a single person. It’s no wonder then that the next step, drawing up an estate plan, is often delayed or forgotten.

Such a lapse can be a huge mistake, however. Unless, of course, you don’t mind if your retirement plan goes to an ex-spouse, for example, rather than your children upon your death. Or worse, imagine if there is confusion about who takes care of your kids after you are gone.

Overhaul your will

The first step is to tear up the old will, if one exists, and write a new one, along with amendments or codicils regarding the guardianship, primary and secondary, of any children, in the event of the death of the parent with child custody. Divorce decrees are supposed to address such issues, but there have been many instances where the wishes of the custodial parent did not necessarily prevail.

Update beneficiaries

Next, make a checklist and inventory of records; I call this a financial junk drawer. You may need to change beneficiaries on life insurance policies, bank accounts, annuities and brokerage accounts, all of which pass outside of a will. You must designate new beneficiaries in writing, too; send a new form to each institution. Request a written confirmation.

Similarly, someone who has just divorced should check the beneficiaries of their pensions, 401(k) and IRA plans. Don’t assume that a divorce decree or state law will revoke earlier designations automatically. Qualified plans, such as 401(k) and pension plans, or employer-provided life insurance policies, fall under ERISA (the federal Employee Retirement Income Security Act), and, legally, that trumps everything. A QDRO (Qualified Domestic Relations Order) that is issued by the court during a divorce proceeding is supposed to address these items, but a QDRO does not apply to non-ERISA assets, such as your IRA.

Durable powers of attorney, which allow someone to act on your behalf if you are incapacitated, may need to be changed, as well. One document should cover financial matters and the other health-care issues, such as DNRs, or orders to “do not resuscitate” under certain medical conditions. These are often called health care proxies.

To help avoid confusion, make sure all new documents, including the will, state that they revoke and replace previous versions.

Some states, such as New York, also have directives designating someone to dispose of your remains. Make sure the person who best knows your wishes is named. Otherwise, a previous designee (rather than the next of kin) may make the decision.

Trusts

The newly single may also want to review or set up trusts to shield assets from creditors and predators. Often these trust accounts are used to set aside funds for children, sometimes with novel arrangements, such as matching funds for income earned, a way of ensuring they are incentivized to do something meaningful and productive with their careers.

Two other trust tips: Life insurance can be used in charitable trusts to provide for philanthropic endeavors while reducing estate taxes. And make sure you appoint a successor trustee in case the trustee passes away.

If divorcing couples previously used an estate planner together, that estate planner is likely now unable to represent both parties due to a conflict of interest. Accordingly, one or both of the parties in a divorce should seek out new advisers, and a new estate plan should be reviewed every three to five years.

The most important thing, however, is to get a new plan done as soon as possible. Unfortunately, many people wait until several years after their divorce.

For those with a substantial net worth, a Certified Financial Planner, accountant or lawyer can help, particularly if the adviser has a cross-specialization with estate planning. For those with fewer assets, many free online tools are available.

Melissa Montgomery-Fitzsimmons is Director of Wealth Planning at First Western Trust.