The Impact of a Divorce on Estate Planning

Births, deaths, marriages, and divorces reshape the definition of family for individuals on a constant basis. It’s no wonder, then, that family law and estate planning often go hand in hand. Estate planners and divorce attorneys alike are often presented with “what if” questions that span both areas of law. Here, a few common questions are explored which can help guide people faced with these life transitions as they make decisions to protect their spouses, children, and assets.

Can I change my Will while I’m getting divorced? Should I?

Although the last thing that many people want to do once the divorce action has begun is engage another attorney, it is actually a good idea to revisit your estate plan at this time. Public policy prohibits disinheriting your spouse, so a spouse who is not named in the other’s Will could file a claim for the “spousal elective share” to receive a portion of the deceased spouse’s estate. The filing of a divorce complaint does not prevent a soon-to-be former spouse from inheriting an equitable share of marital assets. The New Jersey Supreme Court has analyzed what should happen in this situation and applied a remedy which does not allow the surviving spouse a windfall, but at the same time recognizes that at the time of the death, the parties were in fact still married.[1]

If you die without a Will before the divorce is final, then technically you are still married at the time of death, so your soon-to-be ex is still your spouse. The intestacy statute provides that your spouse would receive some or all of your estate, depending on whether you have children and whether those children are also your spouse’s children.[2] Without a Will, you have no ability to choose who receives your property.

Even if you choose to revise your Will during the pendency of a divorce to disinherit your soon-to-be former spouse, this alone will not necessarily prevent him or her from receiving assets from your estate that would have been subject to equitable distribution if the divorce had proceeded until conclusion.

Nevertheless, one important thing that a new Will could change is the appointment of your executor. Because there is no requirement that a married person name the spouse as executor, you are able to appoint someone else to serve in this capacity if you pass away during the pendency of the divorce proceeding. Since the executor is the person who controls the administration of your estate, having someone other than your soon-to-be ex serve in this role may be desirable.

Can I change my beneficiary designations while I’m getting divorced?

The short answer is no, you cannot. When you file a complaint for divorce you also need to file a Certification of Insurance Coverage which details all insurance policies that are in place at the time of the filing of the complaint for divorce.[3] You are also required to disclose any modifications that have been made to these policies during the 90 days prior to filing the complaint. Therefore, if you have a life insurance policy naming your spouse as the beneficiary, unless there is a consent order signed by both you and your spouse that permits you to make such a change, you should not make any modifications during the divorce.

Other beneficiary designations, such as those related to retirement accounts and investment plans, will typically require your spouse to sign a consent if they are removed as beneficiary while you remain married. Further, retirement accounts and investment accounts that were accumulated during the marriage would still remain subject to equitable distribution in the divorce proceeding regardless of the titling of such accounts.

What happens if I don’t change my estate planning documents that name my ex-spouse after the divorce is final?

New Jersey law provides that a divorce decree automatically revokes many rights of your ex-spouse in your estate, such as: (1) disposition under a Will; (2) nomination as fiduciary, such as executor  and attorney-in-fact; and (3) right of survivorship of jointly owned assets.[4] This means if you had a Will that leaves all of your assets to your spouse and names him or her as executor but you get divorced and die without changing your Will, your ex-spouse will not be entitled to inherit any of your property under your Will, nor will he or she be able to serve as executor of your estate.

However, a divorce decree does not automatically void beneficiary designations on life insurance policies or retirement accounts. It is especially important to review the beneficiary designations after a divorce and update them as necessary. The custodians of these accounts are required to distribute the proceeds to whomever is named as the designated beneficiary on file. If your children or other heirs contest this, the custodian may place a hold on the funds while the parties attempt to negotiate a settlement. Even if your children or heirs prevail in an action to receive some or all of the funds, doing so will likely force them to incur legal fees and delay the distribution of the funds. All of this could be avoided by changing the beneficiary to someone other than your ex-spouse.

[1] Carr v. Carr, 120 N.J. 336 (1990)

[2] N.J.S.A. 3B:5-3

[3] R. 5:4-2(f)

[4] N.J.S.A. 3B:3-14.