Eastman & Smith Alert -- Updating the Estate Plan After a Divorce
A divorced individual will rarely wish to leave assets to an ex-spouse at death. During divorce proceedings, a court injunction will often prevent an individual from changing his or her estate plan. However, when the divorce is final, certain changes should be made to the estate plan.
Ohio law automatically revokes distributions to the ex-spouse under a will or trust, and also automatically revokes a power of attorney naming the ex-spouse. However, new or revised documents may still be in order. In addition, if the spouse is named in a health care power of attorney and/or living will, these documents are not automatically revoked, and new documents should be executed.
Ohio law also revokes beneficiary designations in favor of the ex-spouse, but with two important exceptions: (i) beneficiary designations which predate the Ohio statute (i.e., executed prior to May 31, 1990) are not revoked (In re Estate of Holycross), and (ii) qualified plan benefits under ERISA must be paid to the beneficiary named on the plan documents (even if an ex-spouse), because, where ERISA plan benefits are involved, federal plan preempts state law (Egelhoff v. Egelhoff ex rel. Breiner; Kennedy v. Plan Admr for DuPont Sav. and Inv. Plan). Therefore, in these circumstances, a new beneficiary designation must be executed to remove the ex-spouse.
Given the above, a newly divorced individual should always review and update his or her estate plan.