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Once your divorce is finalized, estate planning probably isn't at the top of your list. There are plenty of more immediate things to deal with. Still, this is one area worth revisiting. Colorado law automatically removes a former spouse from some estate planning provisions, but it doesn't apply to everything. Retirement accounts and certain life insurance policies can be especially easy to overlook. A review of your documents and beneficiary designations can help you stay in control when you update your estate plan after divorce.

Key Takeaways

  • Generally, a divorce automatically revokes any revocable disposition to a former spouse unless otherwise provided.
  • Joint tenancy with right of survivorship between former spouses becomes a tenancy in common for property they held together.
  • Automatic revocation generally does not reach employer-sponsored retirement plans or employer group life insurance governed by federal ERISA law.
  • For ERISA-governed employer plans, federal law can override Colorado's automatic revocation rule.
  • Provisions revoked automatically are revived only if the same two people remarry each other, or the divorce or annulment is later nullified.

What Colorado Law Already Updates for You Automatically

Colorado law recognizes that a divorce changes the relationship between former spouses, and C.R.S. 15-11-804 provides an automatic legal backstop for several estate planning provisions. In general, a final divorce:

  • Revokes revocable transfers to a former spouse under a will or other governing instrument defined by C.R.S. 15-10-201(22).
  • Revokes a former spouse’s designation as personal representative, executor, trustee, conservator, agent, or guardian.
  • Severs joint tenancy with right of survivorship between former spouses, converting the ownership to a tenancy in common.
  • Yields to certain divorce-related agreements and orders if the divorce decree, court order, or marital settlement agreement provides for a different result.

These automatic changes are helpful, but they aren't a replacement for updating your estate plan. The statute doesn't pick a new person to replace your spouse when they are the only named beneficiary, executor, trustee, or agent. Other accounts may not be covered at all. If you don't have your divorce documents readily available, proving what’s revoked can be difficult.

Review Your Retirement Account and Life Insurance Beneficiary Designations

When you update an estate plan after divorce, be sure to review your retirement account and life insurance beneficiary designations. Retirement and life insurance accounts that are through your employer are governed by federal law. Because of this, Colorado’s automatic revocation law doesn’t always remove an ex-spouse from certain workplace benefit accounts. Federal law supersedes state laws. The Supreme Court held in Egelhoff v. Egelhoff that an Employee Retirement Income Security Act (ERISA) plan generally has to follow its own plan documents and beneficiary designation rather than a state law. This could apply to a 401(k), pension plan, or employer’s group life insurance plan.

There are exceptions. IRAs and privately owned life insurance policies generally aren't governed by ERISA. Colorado's statute is more likely to apply to those directly. However, updating every beneficiary form personally is the safest practice regardless of which rule technically applies. For an ERISA-governed plan, the beneficiary designation on the plan documents generally controls. If an ERISA-governed plan still lists your former spouse as the beneficiary, the divorce itself may not remove them. That is why the beneficiary designation should be reviewed and updated directly.

Revise Your Will and Trust

Automatic revocation will remove a former spouse’s provisions. Depending on how the will is written, this could leave an empty space for who will inherit. For example, your spouse is named as the sole beneficiary and executor. Then, they are removed from both roles in a divorce. If an alternative isn’t named in the will, then there is no one designated to inherit or become the executor. Another scenario is when alternatives are named. However, now the sole beneficiary and executor default to that named individual. The will may default to unintended alternates or intestacy rules for that portion.

A revocable living trust needs the same review. The distribution provisions, trustee and successor trustee designations, and any references to the former spouse should all be reviewed and updated directly rather than left to the statute.

If the couple has minor children, guardianship nominations also need review. In an estate plan, a guardianship nomination can address who you want to manage a minor child's inheritance or property. That is separate from custody, parenting time, and decision-making authority, which are addressed through the parenting plan and custody order.

Replace Your Power of Attorney and Health Care Agent

Your estate plan should have a power of attorney and health care agent designations. If they name a former spouse, they will be revoked under C.R.S. 15-11-804. The statute specifically covers “agent” as a fiduciary role. However, automatic revocation is only half of the problem. The result is an open role, since no new trusted agent is named. Replacing the revoked documents with updated ones should be considered an urgent task. Life is unpredictable, and these documents need to be completed before they are needed. Without a valid, current power of attorney or health care agent in place, a court proceeding such as a conservatorship may become necessary if incapacity happens before new documents are signed.

Check Every Other Beneficiary Designation

To update your estate plan after divorce, create a list of accounts that need to be checked for beneficiary designations. Each of these accounts needs to be updated post-divorce to reflect your current wishes. Review every account and asset that has its own beneficiary designation, including life insurance policies, retirement accounts and IRAs, payable-on-death and transfer-on-death accounts, and deeds with beneficiary designations.

Updating each account directly may feel tedious. However, taking this approach ensures that each account is updated. Updating directly is still the clearest and safest option even where the statute would likely apply anyway.

Consult with a Colorado Estate Planning Attorney

A divorce can remove a former spouse from some estate planning documents automatically, but it doesn't guarantee that your ex is gone from every account. Colorado law automatically revokes certain provisions involving a former spouse, while federal law can keep an old retirement or life insurance beneficiary designation in place. That leaves some important details for you to handle.

A review with a Colorado estate planning attorney can help you identify what the divorce changed, what it didn't, and what needs to be updated so your estate plan says what you actually mean. Schedule a consultation online or call 720-255-1727 to discuss how to update your estate plan after divorce and which documents you need.