Forward Thinking Family Law Since 1994

Disinheriting Your Former Spouse

Many people think that disinheriting a former spouse means writing a new will. It can mean more than that.

If you and your spouse have executed powers of attorney and medical durable powers of attorney that name each other, you may want to designate a new person to have authority over your finances or health care decisions in case you become disabled during the divorce. Ask your divorce lawyer whether they or someone in their firm who will draft a revocation of the powers and draft new ones. Have that done early in the process.

Check with your lawyer during the divorce about having a new will prepared to be executed after the divorce is final. In Michigan, you cannot disinherit a spouse. However, once the divorce is final, they are no longer your spouse. Also, plan whether an old trust should be revoked and a new one drafted. Even if you did not have a trust during the marriage, it is a good planning device particularly if you have children who are not yet independent.

It is important to note that in Michigan, a beneficiary designation in a trust will survive a divorce. So, please pull all of your estate planning documents and confer with an attorney who focuses his or her practice on estate planning.

Review insurance policies. First check your settlement agreement or judgment of divorce to confirm what obligations you have committed to in that document. Many settlement agreements when the parties have minor children or children who have not completed college, will require the parents to designate each other or the children as beneficiaries. You must comply with these provisions.

  1. Life insurance. Your judgment may have terminated each of your interests in the other's life insurance policies. However, some of these policies are governed by federal law which can permit a former spouse to continue as a beneficiary. Rather than risk a fight between your former spouse and your heirs, request a beneficiary designation form from each life insurance holder and affirmatively change the beneficiaries after the divorce is final. If you have a trust, you can name the trust and then specify how you wish your beneficiaries to receive the proceeds in the trust. Be certain that the "new" beneficiary designations comply with your divorce agreement. If your spouse remains a beneficiary of your life insurance, it is best to reaffirm that designation after the divorce.
  2. Car insurance. Many car insurance policies have a life insurance component. Make certain that your former spouse is no longer listed as a beneficiary.
  3. Home Owner's insurance. Spouses are insured for a variety of things that can go wrong under your home owner's policy. Notify the company that you are no longer married, particularly if you are the owner of the marital home. Ask your former spouse to sign an assignment of all interest in the policy to you. Confer with your agent about whom you should designate in your spouse's place.
  4. Other insurance. Some people have long - term care or disability policies. Check with your agent about appropriate steps to take.
  5. Bank and Financial Institution Accounts. When you opened these accounts, you may have designated a beneficiary. Confer with a representative of the financial institution and make certain your spouse's name has been removed after the divorce.

Retirement Accounts. You should check your divorce agreement regarding the division of these accounts. If you are required to share your retirement plans with your spouse, find out from your divorce attorney how the division will be accomplished. For employer provided plans (401(k), 403(b) and the like), you will need a qualified domestic relations order or eligible domestic relations order to transfer a share of your plan to your former spouse or for you to receive a share of your former spouse's plan. Generally, I recommend that the spouse who is receiving the share of the retirement plan is responsible for having the documents prepared. The participant, or the spouse who is giving up the share, must cooperate to get the orders entered and provide the necessary documentation for the preparer (sample QDRO's, plan summaries and recent statements). Once the plans, have been divided, be sure to designate a new beneficiary for your share.

Individual retirement plans (IRA's) generally do not require QDRO's, though some plans do require them. Check with the holder of the IRA regarding what their requirements are for transferring an interest to a former spouse. IRA's can be divided incident to divorce. After you have divided these in accordance with your settlement agreement, be certain that you designate a new beneficiary or beneficiaries.

Hopefully, you will include these tasks in your post-divorce time-line. Generally, it does not pay to wait to get these tasks done. If you should die or become disabled before you have completed the processes, the people whom you wish to receive your property may lose their interest. Paying attention to such details can assure that the people whom you wish to receive your estate will do so.