After the Divorce

Divorce 1The judge’s signature on your divorce decree does more than make you single –  it erases your ex-spouse from a slew of important documents.

As of the date of divorce, the following occurs automatically:

  • Your durable power of attorney – the powers granted to your ex-spouse are terminated.
  • Your life insurance policy – your ex-spouse is removed as a beneficiary.
  • Your bank account – your ex-spouse is removed as a Pay On Death payee or beneficiary.
  • Your inter vivos or testamentary  trust – the provisions that designate your ex-spouse as a beneficiary, confer a general or special power of appointment on your ex-spouse, or nominate your ex-spouse to serve as trustee are revoked.   The effect is as the ex-spouse disclaimed the interest or (in the instance of serving as trustee) died immediately before the divorce was granted.
  • Your will – the provisions regarding your ex-spouse will be read as if your ex-spouse had died before you.

For your retirement accounts, it is a bit trickier.  Texas law provides that your ex-spouse  is automatically removed as a beneficiary, but the US Supreme Court decided in 2009 that Federal law (specifically ERISA) over-rides Texas law, and that if an ex-spouse is designated as beneficiary, then the ex-spouse gets the money.

Some caveats:  the insurance companies and banks aren’t liable for paying your ex-spouse if you didn’t tell them about the divorce decree.  None of the automatic exclusions take place if your divorce decree states that your ex –spouse must remain a beneficiary.  Some of the automatic exclusions include not just your ex-spouse, but your ex-spouse’s relatives.

Best bet:  once your divorce is final, and if your divorce decree doesn’t prohibit it, then change your documents and beneficiary designations immediately.

Hammerle Finley Law Firm. Give us a call.  We can help.