How Divorce Can Affect an Estate Plan
An estate plan may name the same spouse in several places: as a beneficiary, executor, financial agent, or trustee. After a divorce, it can be tempting to assume that all those roles disappear together.
The safer starting point is to review each document and account separately. Different arrangements can be governed by different rules.
What happens to an Iowa will?
Iowa Code section 633.271 generally revokes will provisions favoring a former spouse after divorce or dissolution, unless the will provides otherwise. The provision also addresses certain relatives of the former spouse and nominations to serve in fiduciary or representative roles.
That does not mean the entire will disappears. Other provisions may remain, and substitute gifts or appointments can become important. The statute also addresses what happens if the same spouses remarry.
Imagine a will that names a spouse as executor but never names a backup. Even when the law addresses the former spouse’s nomination, the document may no longer provide a useful plan for who should serve next.
What about financial authority?
Under Iowa Code section 633B.110, an agent’s authority generally ends when an action is filed for dissolution, annulment, or legal separation from the principal, unless the power of attorney provides otherwise. That trigger is different from waiting until a final divorce decree.
The document may name a successor agent. If it does not, reviewing who could handle financial matters becomes especially important. The statute also contains protections for certain good-faith actions taken without knowledge of termination, which is another reason to communicate changes appropriately.
Why check every account?
A will statute is not a complete answer for insurance or retirement benefits. The earlier Kennedy article illustrates why a plan administrator’s obligations can turn on federal law and the plan documents.
An effective review should include the divorce decree, will, trust, powers of attorney, deeds, insurance, and retirement beneficiary designations. Court orders may also limit what changes can be made.
Divorce changes family circumstances, but updating an estate plan involves more than removing a name. It means making sure the remaining instructions still identify the people you want to receive property and the people who should carry out the work.
Tyler ThompsonAuthor