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Effect of Divorce on Your Will, Trust, and Beneficiary Forms

Are you going through a divorce, or have gone through one recently?

If you’ve ever had the passing thought that your ex-spouse is still named in your will or trust, and cringed, thinking that you have to get that changed before you accidentally hand over your accounts to someone whom you don’t even want to be in the same room with…I have some good news for you. First, you’re not alone. There is a lot going on in any divorce, and sometimes, updating an estate plan can be a small detail in comparison. Second, because you’re divorced, your ex-spouse legally cannot take your assets, even if they’re still listed in your documents. Of course I also have a few words of caution, and some reasons that you still need to get your estate plan and forms updated.

In 1951, even when divorce was much less common than it is now, the Florida legislature enacted a law that addressed this situation. Apparently a lot of people had forgotten to update their wills and trusts before they got on the bus. I suppose the litigation around former spouses taking estates demanded that the law provide some protections. Statute 732.507 clearly states that provisions in a will that affect a former spouse become void after divorce. Similarly, Statute 736.1105, enacted in 1989, states that in a revocable living trust, a divorce means that your ex-spouse, if still named, will be understood to have predeceased you.

What about the effect of divorce on other assets, like life insurance policies, employee benefit plans, and retirement accounts? Statute 732.703 also states that if the beneficiary designation form on these assets names the ex-spouse, and was made prior to the divorce, it is also null. However, your insurance company could be held not liable for messing this up, and transferring assets to your ex if their name was on the beneficiary designation form.
There’s no sense in taking your chances on the beneficiary forms, even if the law is meant to prevent this situation. It can be costly and stressful for your children and other beneficiaries to attempt to recover your assets.

And there are some very good reasons to treat your will-based and trust-based estate plans with the same caution. For example, what if you were to get on the bus before your children are 18 or older? Although the probate judge may agree that your ex-spouse has no claim to your assets, he or she will probably be assigned guardianship of your minor child. Most of my clients are quite okay with that idea, but not okay with the idea that as their guardian, he or she would get to peek into, and have control over, the funds that you have left for your minor children.

We can set up a complex will or trust-based estate plan that will ensure that no matter what, your assets are safely distributed as you would have wanted. In the meantime, call your retirement and insurance providers and get those beneficiary designation forms updated.

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