Many couples that are at or nearing retirement are aware of the benefit of a good estate plan and have already had their directives clearly set forth in writing.
Divorce, naturally, throws a wrinkle in this plan, as couples are forced to rethink how they want their assets distributed and/or who they want making financial and/or medical decisions on their behalf if they are unable.
Understandably, a spouse, almost always, does not want their ex-spouse deciding their end of life care.
If you don’t address your estate planning issues during or following your divorce, Arizona has laws that govern where divorce and estate planning meet.
For example, under Arizona law, a divorce decree will, by operation of law, disqualify an ex-spouse from their eligibility to receive anything pursuant to a Last Will & Testament. In addition, the ex-spouse, again, by operation of law, won’t be able to be the personal representative of your estate or trustee of your trust.
What about designated beneficiaries for IRAs and life insurance?
Again, Arizona law disqualifies an ex-spouse as a beneficiary after the entry of a divorce decree, but there is a catch.
The plan administrator won’t know about the divorce unless they are told. Legally, your former spouse is disinherited, but the life insurance company doesn’t know you are divorced unless and until you tell them. The same holds true for the companies that hold your IRA, your 401(k) and any other asset with a beneficiary designation on it.
Many times the converse holds true in gray divorces; the spouses will agree that upon their death, even though they are divorcing, the surviving spouse still gets everything they have because they were together so long, they built it all together and feel that each spouse should be able to use the marital assets during his/her lifetime. If you fall into this category, there are mandatory steps you must take in order to make this type of agreement happen.
Again, if you don’t do anything to set up or modify your estate plan, Arizona does have laws that disinherit a former spouse, but the law does not know your wishes about who inherits what when you pass and/or who will make decisions for you if you are unable.
If you are at or are approaching retirement age and are considering divorce, and you would like to work with one of our experienced Attorneys regarding updating your estate plan, please call OWENS & PERKINS at (480) 630-2464to schedule your free 30 minute consultation.