Wills and Beneficiary
Designations After Divorce
After a divorce is granted, the parties’ desires as to the disposition of their assets generally changes. Often a person will want his or her children to receive their assets in the event of death. However, to make sure that the correct disposition is made, a new will should be made.
A will can provide for a trust to become effective if the children are not yet adults when the parent dies. The will needs to create the trust and designate a trustee to manage the funds upon death. The trust must specify when it ends, which is generally when a child reaches a certain age. Although the age of majority is eighteen in Arizona and a child can then legally own and manage property and assets, often parents want to delay the receipt of large amounts of money or assets until the child is older, and this can be specified in the will and trust.
Beneficiary designations on life insurance, retirement plans and accounts, IRAs, and other bank and investment accounts should also be changed. These can be changed to the children, or to the estate, if the parent wants the trust created under the will to receive the property and manage it. While there is a statute in Arizona that revokes all beneficiary designations for a spouse upon divorce, it is much better to actually change the beneficiaries, rather than to rely on the statute. Further, there is some conflict between this statute and the federal law on retirement plans that are regulated by the federal law under the ERISA statute.
It is also possible to create a revocable living trust, which will own all of the property of the individual, and upon the individual’s death, a trustee will manage the assets and dispose of them. This has the advantage of avoiding probate, if the trust is correctly created, and all assets of the person are put into the trust.
Careful consideration of all of the assets of a person is important after a divorce, and completion of the necessary documents to carry out the person’s intent in the event of his or her death are essential.
by: Sandra Tedlock