If you’re planning to divorce this year or have already begun the process and have an estate plan, you likely know that this is one of those life events that will warrant some changes to it. However, you may not know just what changes you can (or need to) make and when.
That’s why it’s smart to get estate planning guidance as early as possible and continue to review and update your plan as appropriate throughout the divorce process. Each person’s circumstances are unique, so here we will focus on modifications involving spousal inheritance.
Can you remove your spouse as a beneficiary before the divorce is final?
Technically, a spouse usually doesn’t have to be listed as a beneficiary, so you can probably remove them any time – with or without a divorce. However, under the law, if you predeceased them while still legally married, they could still potentially claim about half of your assets under Texas’ community property statutes. That’s assuming they haven’t waived their inheritance rights in a valid prenuptial or postnuptial agreement.
What happens when the divorce is final?
Once the divorce is final, Texas law states that “all provisions in the will, including all fiduciary appointments, shall be read as if the former spouse…failed to survive the testator.” That means whoever is listed as a contingent beneficiary would inherit those assets. If you don’t have one, it’s time to add one or more.
The law only applies to documents in the estate plan. That means if you’ve listed your spouse as a beneficiary on your retirement and other investment accounts, life insurance policy and other assets, you’ll need to remove them yourself.
It’s often best to wait until the terms of the divorce are final to make these changes since many of your assets are likely to change hands as you divide your property. Further, the divorce terms may require you to continue to include your spouse on your life insurance policy (particularly if you’re paying support) or elsewhere.
There’s a lot more to consider when updating your estate plan as you divorce. Being able to count on an experienced estate planning professional can help you avoid unnecessary mistakes and oversights.
