As Clara Brown Shaffer at Brown & Brown, P.C., reports, generally speaking, a divorce terminates the interest of a former spouse and the former spouse's family under any revocable instrument.
For example, if a spouse named an ex-spouse as the beneficiary of a life insurance policy, the divorce effectively revokes that designation. If a spouse named a step-child as the beneficiary of a life insurance policy, the divorce also effectively revokes that designation since the step-child is family of the ex-spouse. If after the divorce a spouse prefers to keep a step-child named as a beneficiary—for example, if the spouse has a close relationship with the step-child—then the spouse should update the beneficiary after the divorce is final to ensure the child's beneficiary designation is not revoked by law.
Another common example of a revocable instrument is a revocable living trust. A divorce will nullify the ex-spouse both as a beneficiary and as a trustee. Regarding real estate held as joint tenants with right of survivorship, upon the divorce title is converted to tenancy in common. This ensures that the deceased spouse's share does not automatically transfer to the former spouse, which would have been the case as joint tenants.
A divorce, however, does not affect an irrevocable instrument, such as an irrevocable life insurance trust. For this reason, it is important to discuss with an estate planning attorney whether to include a provision addressing the possible divorce or remarriage of the trust's creator. For example, where a spouse is a beneficiary under an irrevocable life insurance trust, the definition of "spouse" should not be limited to the particular current spouse of the trust's creator, but rather the spouse of the trust's creator at the time the trust's creator passes away.
Keep in mind that the effective date of revocation is the date of the court order decreeing the divorce, not the date of filing. If a divorce drags on for a long time or if there is any concern that arises before the final order is issued, it is a good idea for the spouse to revisit their estate planning attorney to modify the plan in the meantime.
If love is rekindled and a spouse remarries a former spouse, then all the provisions that were nullified are automatically revived.
If a spouse is going through a divorce or has not revisited their estate plan since divorcing, it is advisable to review the estate plan and make updates as necessary. Just as a birth or marriage is a major life event, so is a divorce—which is a really good time to review your estate plan to know what will happen to your family if something happens to you.
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