During the divorce process, most people focus on everything that’s involved. Following the divorce, there are endless details that need to be handled, such as retitling assets, refinancing, selling or buying a home, name changes, and forms to update. At this point, estate planning after your divorce should also be included .
Chances are that you and your spouse created wills while you were married. If you’re not married anymore, it’s important to update wills, trusts, and other instruments to ensure that your assets and property are distributed according to your wishes. If you have children, you’ll need to take their needs into account as well.
What If Your Divorce Is Final But Your Will Isn’t Updated?
The Texas divorce decree won’t invalidate the will, but it will invalidate anything you’ve left to a former spouse, as well as a relative by treating them as “previously deceased.” This effectively changes the estate plan from the original and cancels out anything they would receive. If you plan to keep your former spouse as a beneficiary, a new will should reflect that option and specifically name him or her as a recipient.
Texas law also states that a relative of the former spouse is unable to be a beneficiary or have any role in the estate of the deceased unless he or she is also a relative of the deceased. Should you have one of your spouse’s relatives as a financial advisor or part of your estate planning, you may want to reconsider that relationship accordingly.
Many people have trusts to park money in anticipation of keeping it out of the probate process. But how a divorce affects trust will depend on whether it is revocable or irrevocable. According to Texas Family Code § 9.301, there are two answers. A revocable trust allows for changes, and one created prior to the divorce will treat the spouse and any relatives of the spouse as having disclaimed their interest in the trust. Therefore, they will not inherit anything.
By its very nature, an irrevocable trust created during the marriage would not be impacted by the divorce. The assumption is that the irrevocable trust was what the testator wanted without regard to the possibility of divorce later. In this case, the other spouse will inherit whether or not they are divorced. Should the testator’s wishes change, a new trust will have to be created.
Additional Beneficiary Designations
During your marriage you may have acquired:
• Bank accounts with a “payable on death” (POD)
• Insurance policies
• Retirement plans, such as a 401(k) or IRA
• Brokerage account for investments
• Health savings accounts
Each one of these allows you to choose a beneficiary, and they may not be affected by a will or a trust. Therefore, it’s up to you to update your beneficiaries for any accounts have. Texas law generally cancels a former spouse’s right (and that of their relatives) to be a beneficiary after the divorce. However, there are a few exceptions:
• The divorce decree orders it
• The terms of a trust uphold the spouse’s rights despite the divorce
• A clause in your prenup (or postnup) that relates to the division of assets
• The joint trust documents include specific provisions
• The testator designates the former spouse as the POD beneficiary after the divorce is finalized
• The testator puts in writing the wish to uphold the survivorship agreement
You’ll only need to request a new beneficiary form from the provider and make it a point to choose the right beneficiary for your needs.
In the case of a life insurance policy, if you want your former spouse to continue being a beneficiary, you are required to re-designate them after the divorce. Otherwise, the policy will be paid to the named alternative beneficiary (if there is one) or to the estate itself. If your former spouse is caring for minor children, this could be a big problem later.
There are other reasons to review your estate plan after a divorce, particularly if there are minor children involved. If you haven’t reviewed and addressed your will and estate plan after your divorce, make an appointment to do that soon to help your family avoid any difficulties later.
Get Help From Wendy L. Hart With Wills And Estate Planning In Fort Worth
Wendy L. Hart is an experienced family law attorney helping people throughout Tarrant County dealing with post-divorce estate matters. Wendy understands the process as well as the difficulties involved and will work to make sure your property division is done fairly.
Representing both men and women, Wendy will make sure you’re treated fairly, protect your interests and those of your children.
Visit our Mansfield office at 2363 HWY 287 N, Suite 108, use our online contact form, or call us at (817) 842-2336. We’re ready to help.