The divorce process is incredibly stressful and overwhelming. With so much on your plate, it is easy to overlook your estate plan. However, revising your estate plan after a divorce is a critical step and involves more than just updating your will. Below are six areas you must address when updating your estate plan after a divorce in Phoenix.
1. Make a New Will
Most married couples in Phoenix leave everything to their spouse in their will. Once they get divorced, it is doubtful that they still want their ex-spouse to receive their property if they pass away. If you have gotten a divorce, you should revoke your old will and create a new one that reflects your new wishes.
Under Arizona law, if you get a divorce, your will remains valid, but your ex-spouse is disqualified from receiving property as a beneficiary and from acting as your personal representative. They are treated as if they died before you. This rule does not apply to legally separated individuals. There must have been an official divorce decree issued. However, if you still want your former spouse included, you can include them in a new will created after the divorce is finalized.
2. Update Your Trust
Recently divorced individuals should update all of their trust documents. It is likely that their spouse was a beneficiary or named as a trustee. Additionally, property in the trust may have been affected by the property division during the divorce.
In Arizona, if you had a joint marital trust, each ex-spouse is treated as if they predeceased the other. This means that if a spouse dies before the trust is dissolved as part of the divorce, the spouse’s share of the trust (1/2 of community property plus any separate property) would be distributed to the beneficiaries as if there was no surviving spouse. If you had a separate property trust, the ex-spouse is disqualified as a beneficiary and trustee.
3. Revise Your Power of Attorneys
You should revoke old powers of attorney if you named your spouse as your agent. In their place, you should create new financial and health care powers of attorney designating a new agent. Potential choices of agents include adult children, siblings, and trusted friends. To reduce confusion, you should reach out to all the individuals and institutions that have old copies and provide them with a copy of your powers of attorney.
In Arizona, your ex-spouse is automatically removed as an agent on your health care or financial power of attorney. However, a power of attorney will remain valid if the alternate agent is willing to serve.
4. Update Your Beneficiary Accounts
Divorced individuals should update the beneficiary designations on beneficiary accounts that pass outside of probate and are not controlled by the provisions in your will (401(k) accounts, life insurance, IRA accounts, pensions, etc.) You should contact each institution individually and request the proper form to change beneficiaries.
Arizona law disqualifies ex-spouses as beneficiaries of IRAs. However, if the IRA custodian is unaware of the divorce, they will often still treat the ex-spouse as a beneficiary. Additionally, for any federal retirement plans governed by ERISA, your ex-spouse will remain as the beneficiary and is not automatically disqualified.
Former spouses are automatically disqualified as beneficiaries of life insurance policies in Arizona.
5. Retitle Assets
You should retitle your assets to reflect all changes in property ownership. The changes should reflect what is written in your divorce decree and property settlement agreement. Any property held as joint tenants with the right of survivorship or community property with the right of survivorship will automatically switch to a tenancy in common when there is a divorce.
Additionally, if you changed your name during the divorce, you must ensure that the new deeds, titles, and accounts reflect your new name.
6. Plan for Minor Children
Typically, Phoenix courts will grant guardianship of your children to the surviving parent if you pass away. However, you should update your estate plan to include your choice of guardian, especially if you have serious concerns about your ex-spouse’s ability to parent because of a history of abuse, neglect, or addiction.
Your Phoenix Estate Planning Attorney
Nicole Pavlik is an experienced Phoenix estate planning attorney who can help you update your estate plan after a divorce. If you have questions about charitable giving and estate planning, call Nicole Pavlik Law Firm today at (602) 635-6176 for a free consultation.