Divorce changes almost everything—so, how about your estate planning documents? A recent U.S. Supreme Court decision (Sveen v. Melin) is an important reminder of the need to attend to your estate planning documents upon divorce or even upon separation. In Sveen, the former husband had died, and the issue was whether the life insurance policy designation of his now ex-wife as beneficiary had been automatically revoked upon divorce. While most states have laws that automatically revoke the beneficiary designation of a now ex-spouse in a will, only about half the states automatically revoke the designation in non-probate assets such as life insurance and retirement plans.

The Supreme Court ruled against the ex-wife and in favor of the decedent’s children who had been named as contingent beneficiaries in the insurance policy. In doing so, the court applied the state’s statute to that effect even though it had been enacted after the beneficiary designation was made in favor of the wife.

This case highlights the importance of making changes to your estate planning documents where a spouse is named as a beneficiary. For one thing, you want clarity as to your wishes even if your state has laws that seem likely to tilt your way—if for no other reason than to avoid potential litigation. Some of these changes can be made even before your divorce is final. But a spouse has various rights as long as you are married, and certain of these rights cannot be revoked until the divorce is final. These include state elective share rights (rights to a certain proportion of your estate) and beneficiary designations for ERISA (i.e. pension and profit-sharing plan) accounts.

Before making any changes, ask your attorney whether there is a restraining order in effect that prohibits making changes to certain beneficiary designations.

The documents that need to be reviewed include the following:

Your Will. Update your will to reflect what you wish your spouse to receive. If you die while still married, your spouse may be entitled to a minimum share depending on state law. But once the divorce is final, it is your will that will govern what he or she gets. Consider, also, whether changes to executor and trustee appointments are necessary. Note that your will does not govern the disposition of non-probate assets such as joint accounts or jointly owned property. Such property will go to the surviving spouse until the divorce is final unless the title is changed (presumably with the consent of the spouse).

Your Health Care Proxy. This document gives a person you designate the power to make all decisions about your health care in the event you are unable to. Designation of a spouse is not automatically revoked upon divorce. Chances are you don’t want your ex-spouse making these decisions.

Your Power of Attorney. This document designates the person(s) you wish to authorize to act in your stead with respect to all financial and certain other matters. Here too, if your spouse is designated, it is not automatically revoked upon divorce. Furthermore, anyone who has a copy of your power of attorney should be notified of its revocation. Otherwise, this person might allow your spouse to access your accounts.

Trusts. If you have a revocable trust, you may amend it and remove your spouse as a beneficiary either before or after the divorce is final.  However, if the trust is irrevocable, it may be harder or impossible to do this. First, review the trust to see whether it provides that your spouse is a beneficiary only if he/she is married to you at the time of a request for a distribution. If it does not specify such, then you may need to look to state law to determine whether the trust can be amended or decanted.

IRAs and insurance. IRAs are not ERISA plans and thus do not require that you designate your spouse as a beneficiary. Spousal beneficiary designations for ERISA plans such as pensions cannot be changed unless the spouse waives the right to be the primary beneficiary. Check your beneficiary designations on insurance policies and IRAs to see whether changes should be made.

If you have a prenuptial or postnuptial agreement with your spouse, you should review that to determine whether there are minimum amounts you must provide for your spouse.

Once your divorce is final, you should review your documents once again to make any desired changes that may not have been permitted while you were married.

For more information, check out Gideon Rothschild’s website.