Divorce is an emotional and complex process, but one important aspect that often gets overlooked is your estate plan. If you don’t update it, your estranged spouse could still inherit your assets or make crucial financial and healthcare decisions on your behalf. In Arizona, unless you specify otherwise, your spouse remains a beneficiary until your divorce is finalized.
To protect your interests, here are key steps to updating your estate plan during a divorce:
1. Update Your Will and Trust
One of the first things you should do during a divorce is review and update your will or trust. Many estate plans automatically designate a spouse as the primary beneficiary, executor, or trustee. If these documents aren’t revised, your assets could unintentionally pass to your estranged spouse.
While Arizona law revokes provisions for a former spouse once a divorce is finalized, these provisions remain in effect during the divorce. That means your spouse may still inherit from your estate unless you update your documents in advance.
2. Understand Arizona’s Community Property Laws
Arizona is a community property state, meaning most assets acquired during marriage are jointly owned and subject to equal division in a divorce. This can impact your ability to transfer assets or update beneficiary designations before your divorce is finalized.
Before making any changes, consult both your divorce attorney and an estate planning attorney to ensure you’re following Arizona law and protecting your financial future.
3. Review and Update Beneficiary Designations
Certain accounts—such as life insurance policies, retirement plans, and payable-on-death bank accounts—have designated beneficiaries. If you don’t update these designations, your estranged spouse may still inherit these funds.
However, some changes may require spousal consent while the divorce is ongoing. For example, in some cases, retirement account beneficiary changes need written consent from your spouse. Always check with your divorce attorney before making any updates.
4. Update Powers of Attorney and Healthcare Directives
Estate planning isn’t just about assets—it also covers financial and medical decisions if you become incapacitated.
If your estranged spouse is listed in your power of attorney or healthcare directive, they may still have the legal authority to make medical and financial decisions for you. If that’s not what you want, you should update these documents as soon as possible to appoint someone you trust.
5. Remove “Right of Survivorship” on Jointly Owned Property
If you and your spouse own property jointly with “right of survivorship,” the property automatically passes to the surviving spouse, regardless of your will or trust. You may be able to terminate this designation during your divorce, ensuring your share of the property is distributed according to your wishes.
6. Protect Your Children’s Future
If you have children, updating your estate plan is especially important.
- Review and update guardianship designations in your will to reflect your current wishes.
- Consider setting up or modifying a trust to protect your children’s inheritance and provide for their education, healthcare, and living expenses.
Stay Proactive with Your Estate Plan
Divorce brings a lot of legal and financial changes, and your estate plan should not be left behind. By updating your documents, you can ensure that your assets go to the right people, the right decisions are made on your behalf, and your children’s future is protected.
To navigate this process smoothly, work with a qualified estate planning attorney in Arizona. They can help you make the right changes while staying compliant with state laws and the terms of your divorce.
Disclaimer: Any changes to your estate plan, asset transfers, or beneficiary designations should be reviewed with both your divorce attorney and an estate attorney. This ensures compliance with Arizona’s community property laws and the terms of your divorce.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.