A divorce is one of the most stressful events in one’s life. When the divorce is finally over, and the decree signed, there is a sense of relief that the ordeal is over. However, consideration of estate planning, and the need to update existing plans, is critically important after a divorce. Once the dust settles, and a settlement is reached (or, in rare cases, a Court orders the division of assets), the former spouses must consider their estate planning in the context of their new single status. A number of items need to be considered. These are just a few:
One word of caution – we have witnessed several scenarios where the spouses agree that, post divorce, one spouse will remain the beneficiary of the other’s life insurance or other pay on death accounts. The insured spouse assumes that simply leaving the name of the ex-spouse on the beneficiary form will be sufficient. Unfortunately, this will not work. Arizona has a statute that states that all benefits payable to a former spouse are automatically revoked by the divorce. So simply leaving the ex-spouse’s name on the beneficiary form will not work as it will be concluded that he or she simply forgot to update. In this situation, the spouse must specifically update the beneficiary designation (or will or trust which provides for a benefit) post-divorce to clarify the intention to benefit the former spouse.
There are other areas of consideration for divorced spouses that are discussed at our counseling meetings. Do not put this on the back burner for too long or it will be forgotten!