If you find yourself facing a divorce, you’re not alone; hundreds of thousands of people get divorced in the United States every year. Many of them are so focused on getting through the process and with the terms of the divorce itself, that they don’t have the bandwidth to think about other things—like how a divorce affects their estate plan. But neglecting your estate plan during and after divorce can be a big mistake.
You trust your divorce attorney to represent your interests in a divorce. You should trust your estate planning attorney to do the same. The good news is that Michigan law and Florida law offer some protection for divorced individuals who haven’t gotten around to updating their estate plans. Even so, the best course of action is to update your estate plan as soon as possible after your divorce—or even before.
Michigan’s Revocation-on-Divorce Statute
MCL 700.2807, also known as the “Revocation on Divorce” statute, is part of the Estates and Protected Individuals Code (EPIC). It is intended to prevent people from benefiting from the death of an ex-spouse in a way that the deceased ex-spouse would not have wanted. The law does the following:
- Revokes gifts or appointments of property to the ex-spouse or their relatives in a governing instrument executed before the divorce, such as a will or revocable trust.
- Revokes any powers given to the ex-spouse or their relatives in a governing instrument to control or manage assets; in other words, if someone’s will named their spouse as executor, or their trust appointed the spouse as trustee, the divorce will revoke those powers.
- Revokes the nomination of an ex-spouse to serve as guardian, conservator, or agent under a power of attorney representing their former spouse.
- Revokes any powers of appointment given to the ex-spouse or their relatives in a governing instrument, such as the power of appointment over certain assets in a trust.
- Revokes beneficiary designations on most life insurance policies and retirement accounts like IRAs and 401(k)s.
- Severs joint tenancy with right of survivorship between ex-spouses, making them tenants in common. For instance, if former spouses had owned a house together as joint tenants, severing the joint tenancy means that one of them is no longer entitled to the other’s share of the property upon their death (right of survivorship). Instead, as tenants in common, if one former spouse were to die, their interest in the property would pass to their heirs, not the ex-spouse.
A bit of clarification is important: the reference in the statute to relatives of the surviving ex-spouse does not apply to children that they had in common with the deceased ex-spouse—so the revocation-on-divorce statute does not serve to disinherit children. Also, the statute does not revoke the entire will or trust. For legal purposes, the surviving ex-spouse and their relatives are treated as if they died immediately before the divorce took effect.
The revocation-on-divorce statute covers many situations, and you might think that because of that you do not need to rush to change your estate planning documents. Unfortunately, that’s not entirely accurate. Here’s why.
Why You Should Update Your Estate Plan in Divorce
There are several reasons not to rely on state law to effectively update your estate plan for you.
Potential State Law Changes
One is that state law can change. If you are not aware of that change when it happens, you or your loved ones could be left in a vulnerable position. It seems unlikely that Michigan would revoke its revocation-on-divorce law, but it’s not impossible.
Revocation-on-Divorce Doesn’t Revoke Everything
Another reason to be proactive in updating your estate plan in divorce is that the revocation-on-divorce statute doesn’t cover everything. For instance, if you named your then-spouse as the beneficiary of an irrevocable trust, a divorce might not terminate their interest in the trust unless the trust instrument specifically provided for that termination.
An ex-spouse’s rights under a contract governed by federal law might also not be revoked by the statute; federal law often preempts state law. For example beneficiary designations under life insurance policies governed by federal law, or under Thrift Savings Plans, would not be revoked by state law. Similarly, beneficiary designations in favor of a former spouse under ERISA-governed retirement plans (like 401(k)s) would not be revoked.
Imagine working all your adult life to accumulate a retirement nest egg, building up hundreds of thousands of dollars in a 401(k), divorcing in your early 60s, and dying suddenly a year later. If you didn’t update your beneficiary designations, your ex-spouse might retire very comfortably indeed, thanks to that oversight.
Revocation-on-Divorce Isn’t Effective Until the Divorce is Final
It’s not common for people to die or become incapacitated while their divorce is pending, but it’s definitely not unheard of. If you would prefer that the person you are divorcing not be in charge of your finances or medical decisions, or benefit from your estate, talk to an estate planning attorney as soon as possible in the divorce process.
In some states, the law does revoke estate planning provisions in favor of an estranged spouse when a divorce action is filed, rather than when it is finalized. However, most states require the divorce to be final for the ex-spouse to be disinherited or have powers revoked. If something happens to you in the interim, it could mean that your soon to be ex-spouse is making your decisions or receiving money that you don’t want them to.
Greater Clarity for Your Loved Ones
The bottom line is that the more recent your estate plan is, the more likely it is to reflect your current wishes. That results in less confusion and greater clarity for your loved ones as they attempt to carry out your wishes—and more peace of mind for you in the meantime.
Get All the Legal Support You Need During Your Divorce
The divorce process can be stressful, but having your estate plan updated gives you one less thing to worry about as you move forward into the next chapter of your life. To learn how the attorneys at Barron, Rosenberg, Mayoras & Mayoras can help you review and revise your estate plan, schedule a consultation today by calling (248) 213-9514 in Michigan or (941) 222-2199 in Florida. You can also use our simple online contact form.