Divorce has a number of effects on people during the divorce process, including an impact on their estate plans. There are several things you should reconsider.
Let’s assume that during a marriage, the wife and husband had an estate plan prepared that included either a separate revocable living trust for each spouse or a joint revocable living trust for both spouses, wills for each spouse, powers of attorney for each spouse, and each spouse designated the other as a beneficiary under contractual agreements. When the marriage ends through divorce or similar circumstances, Oklahoma law will provide specific changes to some aspects of their estate plan – but not others. It’s important to be aware of the changes to expect. Take a look at the following four legal issues that will impact your estate plans during a divorce.
Revocable Living Trust
If the husband and wife each created a separate revocable living trust during their marriage in which each spouse as trustor named the other spouse as primary beneficiary, Oklahoma law provides the terms in each trust under which the former spouse is beneficiary are revoked upon divorce or annulment.
If, after making an express trust, the trustor is divorced, all provisions in such express trust in favor of the trustor’s former spouse, which are to take effect upon the death of the trustor, are thereby revoked. Annulment of the trustor’s marriage shall have the same effect as a divorce. In the event of either divorce or annulment, the trustor’s former spouse shall be treated for all purposes under the express trust, as having predeceased the trustor.
Okla. Stat. tit. 60, § 175(A).[1]
What occurs if the husband and wife created a joint revocable living trust during their marriage in which each spouse is a trustor and primary beneficiary of the other spouse? Section 175(A) states the “former spouse shall be treated . . . as having predeceased the trustor.” If each spouse is treated as having predeceased the other, then neither will receive anything from the trust as a beneficiary, and if there are contingent beneficiaries, those beneficiaries may claim the principal and income in the trust.
Wills
If a husband and wife each create a will during their marriage in which the other spouse is the primary legatee and devisee, Okla. Stat. tit. 84, § 114(A) provides in part,
[i]f, after making a will, the testator is divorced, all provisions in such will in favor of the testator’s spouse so divorced are thereby revoked. Annulment of the testator’s marriage shall have the same effect as a divorce. In the event of either divorce or annulment, the testator’s former spouse shall be treated for all purposes under the will as having predeceased the testator.
Okla. Stat. tit. 60, § 114.[2]
Powers of Attorney
A power of attorney is an agreement creating a principal and agent relationship. If a husband and wife each created a power of attorney naming the other as their agent end their marriage, the power of attorney may or may not terminate as a matter of law. If the power of attorney was created based on Oklahoma common law or pursuant to the Oklahoma Uniform Statutory Form Power of Attorney Act, proceedings to end their marriage will not affect the powers of attorney.
If a husband and wife each created a financial power of attorney naming the other as their agent pursuant to the Oklahoma Uniform Power of Attorney Act, the filing of a divorce or annulment action or a legal separation terminates the agents’ authority under those powers of attorney, unless the documents otherwise provide. If health care powers of attorney were created pursuant to the Oklahoma Health Care Agent Act a “decree of annulment, divorce, dissolution of marriage or legal separation revokes a previous designation of the spouse as agent,” subject to certain exceptions.
Contractual Agreements
If beneficiary designations are made by a husband or wife of the other and are of a contractual nature, if their marriage ends Oklahoma law will not change those beneficiary designations.[3] For example, if a wife has designated her husband as beneficiary of a life insurance policy of which she is the insured or a retirement account owned by her, divorce will not affect those designations. To change those designations, she should contact the insurer or administrator of the retirement plan and complete the beneficiary change forms.
When a marriage ends through divorce or other proceedings, each former spouse may wish to be proactive in changing their respective estate plan, during or after the proceedings ending their marriage. Otherwise, Oklahoma law may make some changes which each may not desire be done.
Doerner, Saunders, Daniel & Anderson, LLP provides this content for informational purposes only. It is not intended to provide legal or other professional advice nor does the transmission of this information create an attorney-client relationship between any attorney of the Firm and the reader. If you seek legal advice or assistance, please consult with a competent attorney familiar with the applicable laws. If you wish to initiate possible representation by an attorney with this Firm, please call the attorney of your choice. You will be advised of our processes to avoid conflicts of interest and requirements of our letter of engagement before the commencement of representation.
[1] There are exceptions to § 175(A). For example, § 175(A) does not apply if the decree of divorce or annulment is vacated. Okla. Stat. tit. 60, § 175(B)(1).
[2] There are exceptions to § 114, similar to some of those in Okla. Stat. tit. 60, § 175(B).
[3] E.g., Pepper v. Peacher, 1987 OK 71, 742 P.2d 21.
