A client called me last week, mid-divorce. He and his spouse had been separated for nearly a year, and the proceedings were contentious. In the midst of arguing over assets, he’d completely forgotten about his estate plan. His spouse was still named as his healthcare proxy, the agent under his power of attorney, and the primary beneficiary on a multi-million dollar life insurance policy intended for their children.
He was horrified. If he were to become incapacitated tomorrow, the very person he was fighting in court would have total control over his finances and medical decisions. If he passed away before the divorce was final, she—not his children—would receive the bulk of his assets, outright and with no strings attached. This is not a rare oversight. In the emotional and financial turmoil of a divorce, many people forget that their estate plan is still operating on the assumption of a stable, ongoing marriage. The consequences of that inaction can be devastating to the legacy you intend to leave.
The Law’s Automatic—But Incomplete—Intervention
Many people believe a divorce decree automatically wipes the slate clean. New York law anticipates this—to a point. Estates, Powers and Trusts Law (EPTL) § 5-1.4 is the statute that governs the effect of divorce on a will. Once the judgment is final, the law automatically revokes any disposition of property made to your former spouse in your will. It also revokes any provision naming them as an executor, trustee, or guardian.
The law essentially treats your ex-spouse as if they had predeceased you. This is a crucial protection. It prevents a former partner from inheriting through a will you simply forgot to update. But this protection has two significant limitations that I see cause problems for families all the time.
First, the statute only takes effect after the divorce is finalized. The entire time the proceedings are pending—a process that can take months or even years in New York—your existing will remains fully in effect. Should you pass away during this period, your soon-to-be-ex-spouse would likely inherit as planned.
Second, EPTL § 5-1.4 only applies to wills. It does not automatically revoke beneficiary designations on other critical assets.
Assets Your Will Doesn’t Control
The most significant wealth for many executives and professionals isn’t held in assets that pass through a will. It’s held in retirement accounts, life insurance policies, and investment accounts with named beneficiaries. These are governed by contracts, not by your will, and they are not covered by the automatic revocations of EPTL § 5-1.4.
Consider your 401(k), IRA, or other ERISA-governed retirement plan. If your spouse is the named beneficiary, they will receive those funds upon your death, regardless of what your will says and regardless of whether you are in the middle of a divorce. The same is true for life insurance proceeds and accounts with “Transfer on Death” (TOD) or “Payable on Death” (POD) designations.
Changing these designations is an active process. You must contact each financial institution and formally update the beneficiary forms. Failing to do so is one of the most common and tragic errors we see. This single error can divert a lifetime of work away from your children or other intended heirs and into the hands of a former spouse.
Revisiting Your Fiduciary Appointments
Beyond the distribution of assets, an estate plan names fiduciaries—the people you trust to act on your behalf. During a marriage, it’s natural to name your spouse to these roles. During a divorce, those appointments become liabilities.
Two documents are of immediate concern:
- Power of Attorney. This document gives an agent the authority to manage your financial affairs—pay bills, access bank accounts, sell property. If your spouse is your agent, they retain that power until you affirmatively revoke the document and notify all relevant financial institutions.
- Health Care Proxy. This appoints an agent to make medical decisions for you if you cannot make them for yourself. Leaving your spouse in this role during a contentious divorce is an exceptionally high-risk proposition. Their interests may no longer align with yours, yet they would hold the authority for life-and-death decisions.
These documents must be revisited with counsel and formally revoked and replaced. It is not a passive process. Stewardship requires intentional action, especially during a period of life transition. Ensuring the right people are in place to act as your custodians is just as important as directing where your assets will go.
A divorce is, in effect, the dissolution of a complex financial and personal partnership. It requires a corresponding disassembly and reconstruction of your estate plan. It’s not something to put off until after the decree is signed. The period of separation is when your vulnerability is at its highest, and when prudent, deliberate planning is most critical.
The first step is a full audit of every will, trust, beneficiary designation, and fiduciary appointment you have signed. If you are contemplating or currently undergoing a divorce, we can conduct a review of these documents to identify precisely where your plan is exposed and what must be changed to protect your legacy.
