How Is an Estate Plan Affected by Divorce?
It is common for married couples to create an estate plan that provides that everything will go to the surviving spouse upon the first spouse’s death. Further, spouses typically name each other as primary Executor and Agent for his and her General Durable Power of Attorney and Advance Health Care Directive. Even further, spouses commonly list each other as primary beneficiary on life insurance policies and retirement accounts. What happens to these designations upon divorce?
Revising Your Estate Plan After Divorce
Under New Jersey law, specifically, N.J.S.A. 3B:3-14, absent “the express terms of a governing instrument, a court order, or a contract relating to the division of the marital estate,” a divorce automatically revokes any revocable dispositions of property, appointments to serve in any fiduciary or representative capacity (including but not limited to the executor of your estate and agent under your General Durable Power of Attorney and Advance Health Care Directive).
Additionally, a divorce automatically converts the former spouses’ interest in any jointly owned real property from tenants in the entirety or tenants in common with rights of survivorship to tenants in common without the right of survivorship. This means that each former spouse has a separate 50% interest in the jointly titled real property that can be transferred during life, or otherwise transferred to a designated beneficiary upon death.
In consideration of the automatic revocable of dispositions and appointments due to a divorce, updating your estate plan following the finalization of your divorce is important. First, some people still desire to leave certain assets to an ex-spouse or continue their appointment to certain fiduciary and/or representative positions. If so, updating your estate plan after your divorce is necessary to supersede the statutory automatic revocation of these aspects of your estate plan. Further, even if a person does have any issue with the automatic revocation following a divorce, this change warrants the review and consideration of successor beneficiaries and designated fiduciaries who will be next in line following the divorce.
Finally, it is important to note that a divorce automatically revokes any revocable dispositions of property and fiduciary appointments. It does not revoke dispositions and appointments as contained in an irrevocable trust, qualified retirement plans, and other irrevocable rights.
Let Us Assist You With Estate Planning and Divorce Matters
The skilled and knowledgeable attorneys at Lyons & Associates, P.C. have extensive estate planning experience in addressing this particular issue. We invite you to contact us online or give us a call at our office at 908-575-9777 to schedule an appointment.
By: Joanna R. Adu, Esq.