Love is Lost - And So is Your Inheritance - Divorce Really Ends Things

A common plan among our married clients is to leave their property to their spouse, either outright or in trust - oft-referred to as the “I Love You” Will.

Sometimes, love is lost and the couple divorces. We recommend our clients update their Wills after any life-changing event, including divorce. But what happens if the client does not, and the Will in existence at the time of death leaves everything to his or her (now-ex) spouse?

New Jersey has a statute for that.

In New Jersey, in the event of a divorce or annulment, the provisions benefitting the former spouse are given effect as if the former spouse disclaimed any bequests. Any bequests to the former spouse would, in effect, skip the spouse and pass to the next named beneficiaries. N.J.S.A. § 3B:3-14.

Additionally, if the Will names the former spouse as the executor – as our “I Love You” wills often do – the statute provides that the former spouse is treated as if he or she died immediately before the divorce or annulment. The next named executor would be first in line to probate the Will.

Only certain actions will cause the bequests to the spouse or the fiduciary appointment of the spouse to be “revived:” (1) remarriage; (2) revocation or nullification of the divorce; or (3) execution of a Will or Codicil after the divorce.

The statute is not limited to Wills, either. N.J.S.A. § 3B:3-14 also revokes a beneficiary designation to a former spouse under a life insurance policy. Note, though, that if the divorcing spouses intend to continue to name each other as beneficiaries of their respective life insurance policies, the Judgment of Divorce should reflect this agreement, in which case N.J.S.A. . § 3B:3-14 would not apply.

The statue also eliminates any "survivorship" rights in a joint asset.  So, if you and your ex-spouse sill owned a piece of property together, 50% would pass under your will when you died, and not to your ex-spouse as the surviving joint owner.

CAUTION!  One thing that a divorce does not nullify is your qualified retirement plan (401(k) for example) designation. That is because your spouse had a right to be a beneficiary under federal law, which trumps state law.  Many a litigation has arisen where the ex-spouse got the qualified plan because a person didn't bother to change their beneficiary.

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