What happens to a will upon divorce?
Under Arizona law, a divorced person’s will remains valid but the ex is disqualified as a potential beneficiary of the estate. But, a decree of separation does not terminate the marriage and does not disqualify the spouse as a beneficiary. If there is a divorce, the ex is removed from any position named in the will such as personal representative, executor, guardian or trustee. A new will could be drafted reinstating the ex.
What happens to a revocable trust upon divorce?
In the event of a divorce, Arizona law treats a living revocable trust similar to a will. If one or both spouses dies before the trust is dissolved as part of the divorce settlement, each spouse’s share of the trust would be distributed to the beneficiaries as if there was no surviving spouse. If there are separate trusts, the ex is disqualified as a beneficiary of the trust. The ex would also be removed as a successor trustee. However, if the trustmaker (settlor) wanted to keep the ex-spouse as a beneficiary or successor trustee, the trustmaker could sign a restatement of the trust to stating this.
What about powers of attorney?
An ex is automatically removed as an agent named in a financial or health care power of attorney. The power of attorney could still be used if an alternate agent is named.
What happens if a divorced person fails to remove the ex as a beneficiary on an IRA?
Under Arizona Revised Statute 14–2804, an ex is automatically removed as an IRA beneficiary. However, the IRA custodian may not have knowledge of the divorce. There are cases where an ex contested the matter in court.
What about pension, 401(k), profit-sharing and other plans governed by ERISA?
ERISA refers to the federal law governing federal retirement plan accounts such as 401(k), profit-sharing plans, pensions, and other federal retirement plans. These are not affected by Arizona law. The beneficiary designation on file with the plan administrator controls.
Is the ex-spouse automatically removed as beneficiary under a life insurance policy?
Yes. However, there are cases where it is part of the divorce settlement or the policy owner wants the ex to remain as beneficiary despite the divorce. To remove these complications, the policy owner should either rename the ex as a beneficiary after the divorce is final, or put a provision in the divorce decree stating the parties intend that the ex remain as beneficiary on a life insurance policy, or both.
How about payable-on-death, transfer-on-death, or in-trust-for provisions?
An ex is automatically removed as a beneficiary on an account with payable-on-death, transfer-on-death or in-trust-for designations. An account holder should update these accounts immediately upon divorce.
What about property held as joint tenants with right of survivorship or community property with right of survivorship?
Upon divorce, the property automatically becomes tenants in common – each party owns a separate 50% interest, and his or her interest becomes part of his or her estate at death.