How divorce can affect your estate plan with respect to your will and beneficiary designations
Whenever you experience significant life-changing events, it is recommended that you revisit your estate planning documents to make certain that they are in compliance with your wishes. In Virginia, a final divorce decree affects specific aspects of estate planning, but a separation has no such impact. Unless expressly stipulated otherwise, upon the entry of a divorce decree, all distributions made to a former spouse in a will are revoked. Estate assets will pass as though the prior spouse had predeceased the grantor.
Similarly, any appointment of the prior spouse as executor of the will is revoked. However, divorce does not revoke gifts and appointments made to the prior spouse’s family. Thus, if you left your home to your prior spouse’s daughter from a previous marriage, the daughter will still inherit the house unless you amend your will.
According to the law in Virginia, after a decree of divorce is entered, “any revocable beneficiary designation” that grants payment of a death benefit to the spouse is revoked. A death benefit that does not pass to a former spouse shall be as though the former spouse had died before the decedent. Although the law is in favor of those who do not remember to update their beneficiary designations, there are exceptions.
The law is not applicable to the following:
- property agreements and divorce decrees with a provision for the prior spouse to be designated
- any trust or any death benefit to be paid to a trust
In addition, federal law may preempt the law in Virginia. If federal law preempts the law in Virginia, the law in Virginia states that in cases in which the death benefit is paid to a prior spouse of someone who has remarried, and the former spouse had no right to such payment, the prior spouse will be required to reimburse the new spouse. Therefore, if an individual remarries, but neglects to designate his or her new spouse as beneficiary on their federal retirement account instead still naming his or her prior spouse, the new spouse could attempt to secure payment from the prior spouse.
However, in the case of Hillman v. Maretta, 133 St. Ct. 1943 (2013), aff’g, 283 Va. 34 (2012), a widow filed a lawsuit against the decedent’s former spouse for the life insurance death benefit under the Federal Employees’ Group Life Insurance Act (“FEGLIA”). The court battle lasted five years, and went to the United States Supreme Court, which ruled in favor of the former spouse. Thus, the former spouse received the decedent’s life insurance death benefits merely because the decedent neglected to change his beneficiary designation.
In light of the Hillman case, the Virginia statute was changed to reflect that every divorce decree is required to include a notification admonishing the parties that beneficiary designations may not be revoked due to the divorce. Therefore, the parties must assume responsibility for changing their beneficiary designations.