Estate and Trust Planning: What happens after a Divorce

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There is a need to execute a new will after a divorce, and this is over looked very often. Though a statute does exist in New Jersey  (N.J.S.A. 3B:3-14) that has the effect of amending a will and certain beneficiary designations in the event of divorce, it is no substitute for careful estate planning.

The statute provides that, except as otherwise expressly provided in a governing instrument, a court order, or a contract relating to the division of the marital estate, a divorce or annulment automatically revokes any revocable dispositions made by an individual in a governing instrument to his or her former spouse, or to a relative of the former spouse.  Any tenancy will turn into a Tenancy in Common. Also any designation as a fiduciary will be revoked.  New Jersey’s statute essential acts as though the former spouse disclaimed their disposition.

The New Jersey statute was updated to say, unless otherwise expressly provided in the terms of the governing instrument, a divorce or annulment of a marriage revokes any disposition of property made in wills, as well as instruments, such as revocable trust agreements, payable on death bank accounts and designations of beneficiaries in life insurance policies, pension, or retirement plans. This also applies to persons related to former spouse by blood, adoption or affinity.

This does not apply to irrevocable dispositions of property or irrevocable nomination of spouses as fiduciaries, unless the instrument expressly allowed for it.

Being separated does not activate the protection of the statute. The parties must be divorced. If a husband and wife were separated and in the midst of getting a divorce one of the parties dies, and if their will had given anything to the spouse, the spouse would receive it under the will. Thus it is important to change your will when you begin the divorce process, so that things like this will not occur. However, your spouse, in the situation described before, will still get their elective share. However, a larger portion of the estate will go where the party intends.

Also, it is important to note that if a party were to destroy their will before a divorce, the spouse would still inherit under the intestate statute. In New Jersey, that would mean the living spouse would receive the whole estate if all of the children were also the children of the living spouse.

Once a party understands that a divorce is imminent, it is in their best interest to create a new will so that their property can be disbursed in the manner they intended.

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