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Joseph Lyons

Many people do not consider the possibility they will be divorced when estate planning. If someone prepares their estate planning documents prior to a divorce, they will often neglect to go back and change the provisions to remove the ex-spouse. Fortunately, in Iowa, there are some codes which will remove the ex-spouse automatically. However, there are still some things which will need to be changed. This article will discuss:

  • How ex-spouses are treated in wills after divorce;
  • How ex-spouses are treated in various retirement and other accounts after divorce;
  • How divorce impacts powers of attorney;
  • Other estate planning reasons to speak with an attorney if you are getting divorced.

What if the former spouse was never taken out of the will?

A will is usually the primary estate planning document, setting out how assets should be distributed, who receives guardianship of the children, and setting out an executor to manage the estate during probate.

In Iowa, if a person makes a will, and then gets divorced, all provisions in the will in favor of the ex-spouse, or the ex-spouse’s relatives, are revoked. The will can provide otherwise, if the person making the will decides they would still like the ex-spouse to receive the assets.

If the person remarries, then the provisions in favor of the spouse are reinstated, unless otherwise revoked, except for provisions in favor of a person who died prior to remarriage.

What happens with life insurance, IRAs, annuity, stock option, Payable on Death and Transfer on Death accounts

Under Iowa law, a former spouse listed as a beneficiary under a life insurance policy on the date of the divorce decree is voided. It is voided unless the decree lists the former spouse as a beneficiary, the policy holder executes a designation of beneficiary in favor of the former spouse, or the parties remarry. If the beneficiary is voided, the funds will either go to an alternate beneficiary or the estate. An insurer will usually not be held liable if they erroneously send the benefits to the ex-spouse. However, a beneficiary may seek recovery from a person who erroneously received or collected the benefits or proceeds from a life insurance policy.

Ex-spouses or their relatives listed on IRAs, stock option plans, transfer on death accounts, payable on death accounts, and annuities also have their benefits voided. Like Life insurance, this is overcome by a provision of the divorce decree, a designation of beneficiary form, or the spouses remarrying. For annuities, if the payments have irrevocably commenced, they will continue to be distributed to the former spouse. These funds will go to an alternate beneficiary or the estate. Th entity obligated to pay the benefits will normally not be held liable, but a beneficiary may bring a claim against the person erroneously receiving the benefits.

What if a former spouse has medical and financial powers of attorney?

If someone has a power of attorney, and a spouse is listed as their agent, the agency terminates at the time the divorce action is filed. Unlike the above, it terminates upon filing of the action, not at the decree.

If someone has a durable power of attorney for health care, and their spouse is designated as their attorney in fact, this power is revoked upon the entry of a divorce decree. It is the principal’s, (the person who has executed a durable power of attorney) responsibility to notify their health care providers about the change in the durable power of attorney.

In both circumstances, it is important to make changes in the designation of powers of attorney prior to beginning the divorce process (or as soon as you are notified of the divorce process). Otherwise, you risk someone holding financial or medical decision-making rights who does not have your best interests at heart.

What else should someone talk to a lawyer about?

In all of the above cases, the ex, or soon to be ex, spouse is automatically removed as the beneficiary. However, there is still a lot of work to do. If you want benefits to go directly to a beneficiary, and not into your estate, you should designate another beneficiary.

Further, some kinds of accounts, most notably, 401ks, are not controlled by Iowa Law. The ex-spouse will not be automatically removed from the account. Other accounts and assets which fall under federal law will also need to be changed.

Any assets held in joint tenancy, including real estate and bank accounts, will also need to be dealt with. Otherwise, if you die prior to the divorce decree, your ex-spouse will automatically take the assets. Trusts will also need to be correctly modified to prevent a former spouse from taking the assets in trust.

For any further questions, feel free to call us at 630-327-6666.

Disclaimer: The information provided on this blog is intended for general informational purposes only and should not be construed as legal advice on any subject matter. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship. Each individual's legal needs are unique, and these materials may not be applicable to your legal situation. Always seek the advice of a competent attorney with any questions you may have regarding a legal issue. Do not disregard professional legal advice or delay in seeking it because of something you have read on this blog.


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