Marriage and Divorce Change Everything – Even Your Will!
Written by Craig Wisnom
Many people know that if they die without a Will, the state has written one for them. This is through the intestacy laws, which guess that you would want your assets to go to your closest living relatives. The same laws define how you figure out exactly who those people are.
What many people don’t realize is that even if they have a Will, if they later get married or divorced, the law automatically changes part of that Will. This is why it is so important to redo your estate plan and your beneficiary designations after marriage or divorce, even if you don’t want to change your plan.
Take the case of marriage. If you have a Will in place and you get married, the law generally provides that your new spouse automatically becomes the primary beneficiary of your estate! There are exceptions if your children were the previous beneficiaries or your Will clearly indicates you don’t want it changed by future marriage.
So, for example, let’s say you have a Will saying that when you die, you want your assets to pass to some selected charities, nieces, and nephews. If you get married, with no intention of changing your estate plan because your new spouse doesn’t need the money, and you die without executing a new Will, the law will re-write your prior Will and everything will pass to that new spouse. Those charities and family members would be completely disinherited, despite a Will clearly naming them as your selected beneficiaries.
In a situation like this, simply re-executing the identical Will AFTER the marriage would keep the complete estate plan intact. Of course, if you get married and intend for your spouse to be a beneficiary, you’d still want to update the Will or estate plan to make your wishes clear and easy to enforce. You always need to update any beneficiary designations on retirement accounts or life insurance policies because those are generally not automatically re-written to include a spouse. The same applies to the provisions of a Revocable Trust. Additionally, your spouse does not have priority for Personal Representative in this situation over the person named in the Will.
So the bottom line is, after you get married, you should update your Will regardless of whether you want your new spouse to benefit, and also update your beneficiary designations to reflect your wishes.
Divorce works the opposite way. Arizona law provides that upon divorce, the ex-spouse is automatically removed not only as a beneficiary of your Will, but also as a beneficiary under a Trust, beneficiary designations, rights of survivorship, and in all fiduciary roles (such as agent under power of attorney and executor/personal representative). It is much more expansive than what happens after a marriage. Presumably the legislature guesses that people are far more consistent in wanting to remove all rights for the person they’re divorcing!
Again, though, these automatic revisions should not be relied upon. Employer provided life insurance and retirement plans (like 401k’s) are governed specifically by Federal law, and the state removal rules DO NOT apply. Additionally, it’s much better to have the documents specifically updated so the new beneficiaries won’t have to go through the legal process to prove the divorce and the disinheritance. And, of course, there are times where divorces are more amicable and there are certain rights or roles you want your ex-spouse to maintain in your plan. Joint Trusts, which are very common in Arizona, are much better being formally revoked than relying upon the complexity of both spouses being automatically written out. Like the Will referenced above, you may have to re-execute various documents to make sure your plan is intact.
In our experience, failure to update documents and beneficiary designations after divorce or marriage is one of the leading causes of assets not being properly distributed and frequently incurs tens of thousands of dollars in contentious litigation that can arise between the various beneficiaries.
Luckily, the solution for this is quite simple. After marriage and after a divorce, consult with your estate planning attorney to make any necessary changes or updates, and with your financial advisor to review all your beneficiary designations.