If your ex-husband or wife is in poor health and you have not been removed from their will, life insurance policy, or 401(k) plan, are you entitled to receive assets if he or she passes away? This is a question that we often hear. For Arizona residents, the answer is fairly easy to understand, with a few exceptions.
Wills, Life Insurance, and Annuity Policies
Under Arizona law, an ex-spouse beneficiary designation is automatically revoked for wills, life insurance policies, or annuity policies after divorce. This means that if your ex-spouse forgets to remove you as a beneficiary under one of these instruments the mere fact that you are divorced will automatically invalidate your right to be recognized as a heir or beneficiary. Moreover, benefits will be paid and provisions will be carried out as if you had died before him (unless you remarry your former spouse, in which case, you were never removed as a beneficiary and your rights are revived).
The theory behind this automatic revocation statute is that most people do not want to give these benefits to their ex-spouse after divorce, and failure to take action to remove the ex-spouse as beneficiary should not be penalized. The statute also revokes powers of attorney, trustee or conservator designation, and other similar appointments.
Providing For An Ex-Spouse
In the event that someone wants to provide for their ex-spouse under their will or life insurance, they must re-execute their will after the divorce in order for the provisions benefitting the ex-spouse to be valid. However, if as part of your divorce settlement it was agreed, or a Court has ordered, that you are to remain a beneficiary or heir, this agreement or order will be given effect and the revocation statute will not apply.
Employee Benefits and Retirement Plans
Most employee benefit and retirement plans, such as a 401(k), are treated differently. In a majority of cases, such plans are governed by federal law, which overrides state law. As such, these types of plans do not fall under Arizona’s automatic revocation statute. Therefore, if you are named as a beneficiary on one of these plans, you remain the beneficiary even after divorce until this designation is changed.
Remember, the best policy is always to consult with an estate planning expert following a divorce to ensure your estate is distributed according to your wishes upon your death.
Contact us at at Hallier Stearns PLC for more information about your beneficiary entitlement after divorce.