Effect of Divorce on Estate Plan

Why do people get married these days? The common reasons are love, money, religion, or some combination thereof. Divorce, on the other hand, often occurs in the later stages of life in order to obtain certain benefits in times of medical or financial strife (quite often in spite of love, money, and religion). Even though they desire to remain lifetime companions, many couples opt to divorce as a planning strategy to secure creditor protection benefits and government benefits. However, even if a couple’s intent is to remain companions, the law governing transfers on death is not as flexible in its application and can have serious unintended consequences.

Most state statutes provide that a divorce or annulment operates, with some exceptions, to revoke any revocable disposition or appointment of property to the person’s former spouse. For example, the designation of a spouse as a beneficiary of an annuity would not survive a divorce, except as provided by the express terms of the “governing instrument” (i.e. annuity contract and beneficiary designation), the “court order” (i.e. divorce decree), or the “contract relating to the division of the marital estate” (i.e. divorce settlement agreement). Upon the death of the owner of the annuity, the beneficiary designation naming the former spouse would not be effective unless the case fell into one of the listed exceptions, or unless the beneficiary designation was re-affirmed in writing after the divorce became final.

The law in this area assumes that the parties to the divorce also intended to revoke any gratuitous revocable transfers to each other. This legal principle contradicts the general rule that a final beneficiary designation, last will, and testament, or another testamentary gift will be effective as written. Consequently, additional planning is critical in order to effectuate the divorcee’s testamentary intent.

The following estate planning considerations are critical for persons who may wish to divorce:

Legal Counsel

Obtain legal counsel for the divorce proceeding, and coordinate with estate planning counsel. A divorce can have dramatic unintended consequences. Engaging competent counsel will provide a comfort level that all such possible consequences are being considered before a divorce becomes final.


Disclose all assets to legal counsel, including retirement accounts, life insurance, annuity contracts, etc. If an asset is not disclosed and addressed in the divorce decree or the divorce settlement agreement, then there is a very high probability that the person’s testamentary intent with regard to that asset will not be observed.

Title Transfer

After entry of the divorce decree or finality of the settlement agreement, additional title transfers are critical to effectuating the terms of the decree or settlement agreement. Many divorced couples do not follow through with the terms of the divorce decree or the divorce settlement agreement. Generally, the decree or settlement agreement will provide for re-titling of assets, and for changing of beneficiary designations. Some decrees or settlement agreements provide that certain beneficiary designations become irrevocable. Often, spouses will leave assets in a joint revocable trust, thinking that the terms of the trust remain effective. The purpose of A.R.S. Section 14-2804 is specifically designed to make sure that such terms are not controlling.

Complete Revision

Consider complete revisions and restatement of existing estate planning documents. The time immediately following a divorce is an ideal time to revise or restate existing estate planning documents. The planning considerations above make the post-divorce estate plan a critical step in ensuring that a person’s testamentary wishes are honored, whether or not there will be significant changes to the dispositive terms of the estate plan. As stated previously, it is necessary to reaffirm wishes to provide for the former spouse if that in fact is the person’s intent.

Many people considering divorce elect not to hire counsel in order to save the legal costs. However, a small number of legal costs upfront can avoid dramatic costs of attempting to remedy unintended consequences that could have been avoided with the aid of counsel. After a person is deceased, no amount of love, money, or religion can change the legal effect of the unintended consequences of divorce on an estate plan.

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