Divorce and Your Estate Plan

"So many persons think divorce a panacea for every ill, who find out, when they try it, that the remedy is worse than the disease"
--Dorothy Dix

If you are considering divorce or beginning the process of divorcing, you must review your estate plan to make sure it is appropriate in light of the anticipated divorce. No matter how far along the divorce is or how long the action has been pending, the law considers you to be legally married until the judge signs the final decree ending the marriage.

If you die or become disabled prior to the final decree of divorce, your estranged spouse may have legal control over you and your estate, and may be entitled to most, if not all, of your estate. This is probably not what you intend. Through properly drafted estate planning documents, you can provide that someone other than your spouse will have control over you and your estate, and you can limit your estranged spouse's rights as a beneficiary of your estate.

What happens to your estate plan when you get a divorce?

If you made a will before you were divorced, the law provides that any provision in the will for the benefit of your former spouse is ineffective. The former spouse has no rights in your estate, either as a beneficiary or as an executor or administrator. The will is not revoked, it is interpreted as if your ex-spouse had predeceased you.

This rule of law applies only to the ex-spouse. If your will makes provisions for the ex-spouse's children or more remote issue, or other relatives of your ex-spouse, these provisions of the will stand. The divorce has no effect on them.

If you made a will before the divorce and indicated in the document itself that you intended the provisions for your soon to be ex-spouse to be still valid after the divorce, then your announced intention overcomes the law.

If you die during the divorce and before the final decree, the rule of law excluding your soon-to-be-ex-spouse does not help you. If you will leaves everything to your soon-to-be-ex-spouse, that's who will get your estate.
Any other estate planning document, such as a trust, will also be interpreted in the same way provided that it is revocable at the time of your death. If you have made a revocable inter-vivos trust, sometimes called a living trust, any provision in this document for your ex-spouse will be invalid. The fact that the trust must be revocable for this rule to apply is an important one. If you made an irrevocable trust before your divorce, such as an irrevocable life insurance trust or "ILIT", and your ex-spouse is a beneficiary of that trust - the law will not save you. The transfer to the trust was made prior to the divorce and the ex-spouse's property rights were determined at that time since the trust, being irrevocable, cannot be changed by you in any manner. To avoid unintended results in this scenario, it is important in an irrevocable trust to specify that a divorce will remove the spouse from beneficiary status and that when used in the documents "wife" or "husband" means whomever you are married to, not a specific individual who is now your ex-spouse.

If you have signed a Power of Attorney giving your spouse the authority to act as your agent, this grant of power is revoked when either spouse files an action for divorce. Until the action for divorce is filed, the spouse can act using the power of attorney - this can be a very dangerous power. Note that unlike the will, the provision naming the spouse in a power of attorney is revoked when the divorce action is filed, not at the final decree.

When a divorce action is filed, only the appointment of the spouse as agent in the power of attorney is revoked, the whole power of attorney is not revoked so the named successor agent can serve. If the power of attorney includes an appointment of the spouse as guardian, if a court appointed guardian is necessary, that appointment is not revoked by filing for divorce. Instead, a court would have to decide if filing for divorce is a good reason not to appoint a spouse as a guardian. When the divorce becomes final, however, the appointment of the ex-spouse as guardian is revoked.

Another issue to think about during a pending divorce is health care issues. Have you remembered to change your living will and medical directive? If you don't, someone you might not want to make your decisions could be allowed to make decisions about your health. It is unclear whether filing for divorce or even being granted a final divorce decree revokes the designation of a spouse as a surrogate under your medical directive. Arguably, the surrogate is the same as an agent under a power of attorney and under the law an agent's power is terminated when divorce is filed.

If an ex-spouse is designated as a beneficiary on a life insurance policy, annuity contract, pension, profit-sharing plan or other contractual arrangement providing for payments to the spouse, any designation which was revocable at the time of death is ineffective and the beneficiary designation is construed as if the ex-spouse had predeceased. If the designation or a separate contract (such as a property settlement agreement) provides that the designation is to remain in effect even after the divorce, then the designation remains effective,

Note that the financial institution involved will not know whether or not there has been a divorce. If the ex-spouse claims the benefit as named beneficiary, PA law specifically provides that the paying company shall have no liability. The ex-spouse, of course, is liable but as is always the case with financial liability, one can only recover funds if the defendant still has the funds and has not spent them.