Divorce Changes to Your Will or Trust

Summary:  Change all of your wills, trusts, pension plan, and life insurance beneficiary designations ASAP after a divorce is final. Even though Colorado has a statute which revokes all rights of a former spouse, some federal case law holds that not all state automatic beneficiary revocations are effective.

Colorado Law Provides That Portions of Your Estate Plan Are Revoked in Divorce

Divorce results in an automatic change to your estate plan. Colorado has a revocation statute CRS §15-11-804, which operates to revoke and cancel existing estate planning documents which gave your spouse specific rights.

In general, the statute:

1. Revokes any gift or distribution to your spouse, including life insurance beneficiary;

- including any gift in your will or revocable trust

- including an IRA beneficiary designation

- including a life insurance beneficiary

- but, certain ERISA pension plans may be exempt from the revocation

2. Revokes any designation of your spouse as an agent under any power of attorney;

3. Revokes any designation that your spouse act in any fiduciary capacity, such as a personal representative under a will, trustee under a trust, agent under a power of attorney, or guardian;

4. Severs any joint tenancy property ownership, and converts property ownership into a tenancy in common (with no right of survivorship.)

Except that the statute may be overridden by:

1. The express terms of a written agreement;

2. Court order;

3. Documents signed after the divorce is final; or

4. Federal law (particularly as to pension plans)

So, in other words, your spouse no longer inherits from you or can act in a fiduciary capacity after a divorce, unless you take certain steps or the court orders otherwise.

An exception might be an irrevocable trust, such as a life insurance trust. And certain ERISA pension plans (including 401(k)) may not be subject to the automatic revocation.

Therefore, make sure that you change all of your beneficiary designations ASAP after a divorce decree is issued. And, update all of your estate planning documents.

Visit www.ColoradoTrustPlan.com for more information.