Getting a Divorce? Updating Your Estate Plan Is a Top Priority.
If you are getting a divorce, you may not realize that the divorce can significantly impact your estate plan, due to an Arizona law that automatically changes key estate plan provisions relating to your ex-spouse and their relatives. Other legal documents and assets may also be affected. After a divorce, getting help from an experienced estate planning attorney is the best way to ensure that your estate plan fully protects you and your loved ones.
Arizona Revocation-on-Divorce Statute
Arizona is one of many states with a law known as a revocation-on-divorce statute, which is found in A.R.S. § 14-2804. These laws are designed to protect divorced spouses in matters that might be overlooked during a divorce case.
The Arizona statute automatically revokes beneficiary designations of an ex-spouse and their relatives in a last will and testament, trust, bank or brokerage account, individual retirement account, and other legal documents as soon as the court issues a divorce decree. The law also revokes agent and fiduciary designations of a former spouse (and their relatives) in powers of attorney and other estate planning documents.
The provisions of the Arizona revocation-on-divorce statute law only apply when a specific issue is not addressed in the divorce proceeding and the final court order. If the divorce decree specifically addresses an issue in a court-approved property settlement agreement, property division decision by the court, or another post-divorce legal document, the provisions of the divorce decree prevail. In other words, when express terms in the divorce decree address an issue, the statutory provisions do not apply. But the statute does apply if an issue is not expressly addressed in the divorce proceeding and final order.
Impact of Revocation Law on an Estate Plan
After a court issues the final divorce decree, the Arizona revocation-on-divorce law may directly affect documents in your estate plan that name your former spouse or a relative as a beneficiary or fiduciary, including:
To reiterate an important caution from above: If a specific matter is addressed in a divorce proceeding and decree, the provisions of the court order are controlling. However, if an issue is not addressed in the divorce proceeding, the law effectively removes an ex-spouse as a beneficiary and fiduciary from all estate planning documents. Fiduciary positions in an estate plan include an agent under a power of attorney, executor (personal representative), guardian, conservator, and trustee.
Application of the law does not invalidate the documents, however. If a document names a contingent beneficiary or alternate fiduciary, the terms of the document remain valid as to the designated alternate beneficiaries and agents. However, if an alternate beneficiary or fiduciary is not named in a document, it is essential to put a new document in place at the earliest possible time, to ensure you protect yourself and your loved ones after the divorce.
In some cases, a person may wish to keep a former spouse as a beneficiary or fiduciary. In that situation, it is necessary to execute a new document to add the former spouse back in as a beneficiary or fiduciary.
Other Affected Property and Assets
In addition to impacting estate planning documents, the Arizona statute also affects assets and property with named beneficiaries, such as life insurance policies, individual retirement accounts, and some types of bank and brokerage accounts. If an asset with a designated beneficiary is not addressed in the divorce proceeding, the Arizona law revokes any existing beneficiary designation of a former spouse following the divorce.
There is a significant exception: Federal retirement plan accounts governed by ERISA, including pension, 401(k), profit sharing, and other types of accounts, are not affected by the Arizona statute. An ex-spouse named as a beneficiary on one of these types of accounts will remain as a beneficiary unless the plan participant submits a new beneficiary designation. These types of accounts are usually addressed in a divorce property settlement, and changes in the beneficiary or account may be necessary to comply with the terms of the property division.
The law also may affect property and assets jointly owned with a spouse, if the specific property is not addressed in the divorce case.
Essential Steps to Take After a Divorce
If you are getting a divorce, the broad impact of the Arizona revocation-on-divorce law makes it imperative to update your estate planning documents, to make certain that your estate plan fully protects you and your loved ones and that it complies with the terms of the final divorce settlement. The best time to reach out to your estate planning attorney is before the divorce is finalized, so you and your attorney can prepare to put your new estate plan in place as soon as the court issues the divorce decree.
An experienced estate planning attorney helps you update your will, living trust, powers of attorney, and any other affected documents. In addition, your lawyer reviews all your property to identify all assets with a beneficiary or fiduciary designation and jointly owned property not addressed in the divorce case, to ensure that you update all legal documents affected by the divorce.
If you delay updating your estate plan and other legal documents after getting a divorce, you or your loved ones may encounter difficult legal issues that take time and money to resolve, including conflicts that arise between your estate plan and the terms of the divorce settlement. You also risk having state laws make decisions on your behalf if you fail to make the necessary changes in your estate plan.
Schedule a Free Consultation With an East Valley Estate Planning Attorney
At Peterson Law Offices, estate planning is a focus of our practice. If you are getting a divorce, we can review your current estate plan and other legal documents and work with you to make necessary post-divorce revisions.
We take pride in providing high-quality services at affordable prices and welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.
