It is important that each spouse revise his or her estate plan after divorce. While divorce automatically revokes spousal rights under a will, trust, and powers of attorney, it invariably leaves a void with respect to who is in charge and who inherits. Under Michigan law, a divorce decree revokes the authority granted to a former spouse (and their relatives, other than children of the marriage) and terminates their right to inherit. Unless a new estate plan is created, the probate court will determine the deceased or disabled spouse’s fiduciaries and heirs.
Michigan law also automatically terminates beneficiary designations naming the former spouse. However, under federal law (the Employee Retirement Income Security Act of 1974 (ERISA)) divorce judgments do not automatically terminate a former spouse’s entitlement under company life and retirement benefits. The family would have to sue the former spouse to compel the return of such benefits. It is therefore especially important to change the beneficiary under employer-provided benefits after divorce.
Updating an estate plan after divorce is important to avoid probate and to give full effect to your wishes. It can be especially important for ERISA benefits and for those with minor children since without a new trust the former spouse would gain control of the children’s inheritance.