What Happens to Your Estate Plan When You Divorce?
By Michael Giusto and Lois Brenner
Getting a divorce is a stressful experience and it’s not unusual
for spouses to forget to address estate planning issues either before,
during, or afterwards. However, not updating certain documents or considering
your future financial situation could have serious unintended consequences.
Impact of divorce on existing planning documents
New York law attempts to protect spouses who fail to update their estate
planning documents by providing that a final divorce decree automatically
triggers certain changes. NY Estates, Powers, and Trusts Law § 5-1.4
states that except as provided by the express terms of a governing instrument,
a final divorce decree automatically revokes dispositions of property
to a former spouse, including under wills or by beneficiary designations
on testamentary assets. In other words, even if the divorced spouses don’t
change their estate planning documents to disinherit their former spouse,
a divorce decree generally will automatically revoke the disposition of
property to the former spouse. The exception would be in the unlikely
event that the terms and conditions of the trust, insurance policy, retirement
account, etc. expressly stated that a divorce would not revoke the beneficiary
A divorce decree also revokes a former spouse’s authority to act
as a fiduciary, executor, trustee, guardian, power of attorney (See NY
General Obligations Law § 5-1511) and health care proxy (See NY Public
Health Law§ 2985(1)(e)). In the case of real estate jointly-held
by spouses, the “tenancy by the entirety” (which means that
at the death of the first spouse, the survivor owns 100% of the property)
is automatically changed to a “tenancy in common,” meaning
that each party holds a half-interest in the property with no right of
New York law does not automatically make all of the necessary updates to
estate planning documents which should be addressed after a divorce. Certain
changes require action by the parties. Common situations you should address
with your estate planning attorney include the following:
Designations during the divorce process. Finalizing a divorce can take years. While that process is ongoing, you
likely do not want your estranged spouse (soon-to-be former spouse) to
have authorization to make decisions related to your medical Power of
Attorney or to conduct financial transactions on your behalf. These documents
should be updated before your divorce is final. (One thing to keep in
mind—if you pass away before your divorce is final, you cannot disinherit
your estranged spouse, who is still entitled to an elective share of your
estate under New York law).
Designations to your in-laws. It is common during a marriage for a will to name in-laws as guardians,
beneficiaries, or executor. These designations are
not automatically eliminated by a final divorce decree.
Gaps in designations. For purposes of administering an estate, a divorced spouse is treated as
having died before you. This means that if your will named your former
spouse as a beneficiary or nominates him/her as an executor, you may now
have a gap in your estate plan. While state law does establish an order
in which assets not covered by a will are distributed, this may not be
consistent with your intentions.
Changes required by divorce decree. Spouses may be required to take steps related to estate planning devices
as a part of the divorce resolution, such as maintenance of life insurance;
or formation of a trust for the benefit of the divorced spouse or for
the benefit of a child, but controlled by the divorced spouse as a trustee.
Impact of divorce on retirement accounts and pensions
During the divorce process, the division of retirement accounts and pensions
will be part of the financial settlement. Normally the portion of each
account that has accumulated during the marriage for both parties is added
together and divided, with half the value given to each party. In the
case of pensions, the portion accumulated before marriage and after the
marriage is over is generally considered separate property; the rest is
subject to equitable distribution as marital property. Distribution of
retirement accounts and pensions can be complex and involve analysis of
the type and value of the accounts and tax consequences when the recipient
takes money out of the accounts, in addition to possible penalties for
early withdrawal. A lawyer can arrange to have a pension evaluated for
purposes of the financial settlement.
Negotiations regarding financial settlements are common. Since the financial
settlement will have long-term consequences to the spouses’ retirement
and estate planning goals, it’s important to have legal representation.
However, litigation is not necessarily the best solution for reaching
a beneficial settlement.
In a lawsuit, there is a lawyer for each party (and twice the cost). This
is particularly true for the spouse with more assets, who may be required
by law to pay for both sides’ attorneys. The process is time-consuming,
adversarial and the parties have little control over what occurs or the
results. As an alternative, in mediation, one trained person—usually
a lawyer—helps both parties negotiate their own agreement without
the interference of judges or adversarial lawyers. There is only one (smaller)
fee for both people. It is faster and more collaborative. The mediator
facilitates creative problem-solving. The parties control the results
and are more likely to be satisfied with the outcome.
Once a settlement is reached and the divorce is finalized, New York law
automatically revokes beneficiary designations except where the plan documents
may have contrary provisions as discussed previously. In the case of retirement
accounts and pensions, it is good practice to make these changes yourself
to ensure they are implemented particularly if the divorce decree and
financial settlement requires a change in beneficiary designation. It
is also important to revisit your whole estate plan since your new circumstances
may necessitate other modifications.
Divorce involves many legal and financial changes (in addition to the emotional
ones). If you are considering divorce, contact
Lois Brenner for a consultation to discuss your options.
For assistance with your estate planning during or after your divorce, contact
Lois M. Brenner, Esq., PA-C, is a New York Divorce Attorney and an accredited
Divorce Mediator with over 35 years' experience. She is also a psychologically
trained licensed medical professional. For more information, visit
Michael Giusto is a partner at Neufeld, O’Leary & Giusto and
focuses his practice in the areas of estate/trust matters and civil litigation.
For more information, visit