News

How Divorce Affects Estate Planning Documents

How Divorce Affects Estate Planning Documents

By Christine V. Finn, Esq.

When spouses divorce their estate planning documents are affected.  Under Colorado law, any revocable designation of a former spouse as a beneficiary or a fiduciary in estate planning documents is automatically revoked upon divorce.  This includes documents such as wills, trusts, powers of attorney, and beneficiary designations for assets that are paid out on death.  Also, any assets owned by former spouses as joint tenants with the right of survivorship will automatically be owned as tenants in common upon divorce.

The purpose of this law is clearly to ensure that former spouses’ most probable wishes are carried out.  If a former spouse is designated as a personal representative, an agent, or a trustee, that former spouse will be treated as if he or she is deceased and the named successor individual will take on that role instead.  If a former spouse is designated as the beneficiary of assets, that former spouse will be treated as if he or she disclaimed the property and those assets will go to the named contingent beneficiary instead.

As always, individuals should coordinate their beneficiary designations with their estate plans.  They should review every document to determine whether the designation of a former spouse will remain in effect or be automatically revoked.  They should review contingent beneficiaries as well, to determine if assets will go through probate or get paid to unintended heirs at law if an automatic revocation does occur.  Just to be safe, individuals may choose to designate other beneficiaries, even if a designation in favor of a former spouse is automatically revoked.

There are some situations where the automatic revocation will not take place.  For example, if the specific document states that a former spouse is required to receive the asset unless the beneficiary designation is changed before death then he or she will receive the asset, regardless of a subsequent divorce.  In addition, if a court orders a particular division of property in a divorce then that court order will prevail.  Further, if the spouses or former spouses enter into a marital agreement regarding the division of the marital estate then that agreement will succeed.  Nevertheless, if former spouses still want to name each other as beneficiaries or fiduciaries in their estate planning documents, it will be effective if they do so after the divorce is final.   

Spouses should also consider what happens to their estate plans while their divorce is pending.  For example, many spouses designate each other as the sole beneficiaries of their estates.  If one of them passes away before the divorce is final, then his or her spouse will receive everything.  Thus, the spouses may want to revise their estate plans before the divorce is final so their assets go to other beneficiaries upon their deaths.  It is important to note, however, that a disinherited spouse can elect to take a statutory share of the other spouse’s estate.  In that case, the assets he or she receives by statute will still be less than what he or she would have received as the sole beneficiary.

Because divorce affects estate planning documents, spouses should always consult with both their divorce attorney and their estate planning attorney before making any changes to their estate plans because when one spouse files for divorce, a temporary injunction goes into effect that restrains both spouses from transferring, encumbering, concealing, or in any way disposing of any marital property without the other spouse’s consent or an order of the court.  Therefore, spouses should proceed cautiously so the court will not have reason to conclude that they violated the temporary injunction.

News

Contact Us

1120 Lincoln Street
Suite 1100
Denver, CO 80203
Phone Number: 303-832-1900
Fax Number: 303-863-0412
This email address is being protected from spambots. You need JavaScript enabled to view it.

Our Location


View Larger Map