How Divorce Affects Your Estate Plan


17 Sep
17Sep

Most married couples plan their estates together. Both parties rely on the other to make important financial and healthcare decisions for each other and to raise their children in the event that one passes away. But what happens when a couple who created a thoughtful estate plan decides to end their marriage? It is important to know how divorce affects your estate plan as well as the consequences of failing to revoke and replace a plan. 

Revoking an Estate Plan After a Divorce

A divorce has multiple impacts on an estate plan. Depending upon the state in which the former couple lives, fiduciary appointments are revoked by operation of law upon a divorce. This includes the Personal Representative of a Will and Agents under a Durable Power of Attorney and Health Care Proxy. This makes sense from a policy standpoint; you can imagine why someone would not want their ex-spouse making life or death healthcare decisions for them if they ever become incapacitated or to control their money. 

For more complex estates that involve estate tax planning, couples who created revocable trusts structured to reduce estate tax liability are in particular need of revoking and replacing their plan. These types of trusts rely heavily on the marital status of the parties involved. If one party dies after a divorce and the couple has not revoked the estate plan created during the marriage, the plan will not function correctly. It may lead to costly litigation and difficulty accessing assets that otherwise may have passed to the decedent’s children.  

Beneficiary Designations and Divorce

Beneficiary designations are a critical part of an estate plan. Click here to learn more. Often times, an estate planning attorney will advise their client to name their spouse as a beneficiary of a retirement account or life insurance policy. If the spouses divorce, however, this can be problematic. Depending on the state in which the couple lives, some beneficiary designations naming a divorced spouse are automatically revoked by operation of law (provided that the account custodian or insurance company is notified of the divorce). 

Other types of beneficiary designations are not automatically revoked upon divorce, meaning that the divorced spouse is entitled to receive the asset even though the divorce may have taken place decades earlier and both parties have new lives and new families. Reviewing and updating beneficiary designations is a crucial step after a divorce to avoid unintended consequences. 

Prenuptial Agreements

If you planned ahead for your marriage, you may have executed a prenuptial agreement. Typically, prenuptial agreements include a provision that each party is free to create their own estate plan once the divorce is final. This means that an ex-spouse is no longer entitled to any portion of their former spouse’s assets in a will, trust, or under the intestacy laws. 

The prenuptial agreement can also outline whether the parties are required to maintain insurance on their own life and name their ex-spouse as a beneficiary (this is typically done when there are children of the marriage who would lose a sizable amount of support if one of their parents passed away) and other terms of amending or revoking an existing estate plan. 

Uncovering the ways a divorce affects your estate plan can be difficult to on one’s own. If you created an estate plan during your marriage but are contemplating divorce, please contact us at The Law Offices of Amanda L. Mulhall for an initial consultation. We can help advise you of your rights and help to implement a new plan reflecting your new priorities moving forward.