Divorce and Estate Planning in New York: What You Must Update — and When

Tom and Carol separated in February. By October, Tom had moved out, retained a divorce attorney, and started rebuilding his life. But he never updated his estate plan. No new will. No new beneficiary designations. No change to his power of attorney or healthcare proxy — both of which still named Carol.

Tom died in a car accident eleven months later. The divorce wasn't final yet.

What happened? Carol had a legal claim to Tom's estate. She still had authority under his power of attorney to manage his assets. She was still the beneficiary on his life insurance policy — a $400,000 payout. His adult children from a prior relationship received almost nothing.

That scenario plays out more often than anyone wants to admit. Divorce is emotionally consuming. Estate planning feels like paperwork. But failing to update your documents during and after a divorce can mean your ex-spouse inherits your life's work.

Let me walk you through exactly what happens — and exactly what you need to do.

What New York Law Changes Automatically After Divorce

New York's Estates, Powers and Trusts Law (EPTL) Section 5-1.4 does provide some automatic protection once a divorce is final. Once a judgment of divorce is entered, certain provisions in your will and other governing instruments are automatically revoked as to your former spouse.

Specifically, upon divorce, your ex-spouse loses:

• Any bequest or devise under your will
• Any appointment as executor, trustee, or guardian under your will
• Any survivorship rights in joint tenancy property (in some circumstances)
• Any revocable trust benefits that were expressly contingent on marriage

The will isn't voided entirely. The gifts to your ex are treated as if they predeceased you, and the rest of the will remains intact.

What New York Law Does NOT Change Automatically

Here's where people get blindsided. EPTL 5-1.4 has major gaps. Many of the most valuable assets you own pass outside your will entirely — through beneficiary designations. Those are NOT automatically revoked by divorce.

Beneficiary designations on these accounts survive your divorce completely unchanged:

• 401(k) plans
• IRAs (traditional, Roth, SEP, SIMPLE)
• Life insurance policies
• Annuities
• Pension plans
• Bank accounts with POD (payable on death) designations
• Brokerage accounts with TOD (transfer on death) designations

These accounts are governed by federal ERISA law (for retirement accounts) or by the individual account agreement. New York's automatic revocation statute doesn't touch them. The U.S. Supreme Court confirmed this in Egelhoff v. Egelhoff — federal law preempts state revocation-on-divorce rules for ERISA-governed accounts.

Translation: if your 401(k) still lists your ex-spouse as beneficiary after your divorce is final, and you die, your ex gets the money. Full stop. The divorce decree doesn't override it. The new will doesn't override it. You have to change the beneficiary designation on the account itself.

This is one of the most common and most costly estate planning mistakes I see.

The Elective Share Problem During Divorce Proceedings

Here's something divorce attorneys don't always tell their clients: until the divorce is final, your spouse is legally your spouse. And in New York, a spouse has the right to claim an "elective share" of your estate regardless of what your will says.

Under EPTL 5-1.1-A, the elective share is the greater of $50,000 or one-third of your "net estate." The net estate includes probate assets plus certain non-probate transfers.

If you die during the divorce proceedings — before the judgment is entered — your estranged spouse can elect to claim one-third of your estate. That's true even if you've been separated for years. Even if there's a separation agreement. Even if you hate each other.

A separation agreement can include a waiver of the elective share right, but it must be carefully drafted and comply with New York's requirements under Domestic Relations Law Section 236. If it's not properly drafted, it might not be enforceable when it matters most.

This is why you need both a good divorce attorney and a good estate planning attorney working in coordination during a divorce — not sequentially, but simultaneously.

Powers of Attorney and Healthcare Proxies: The Overlooked Danger

Divorce law in New York automatically revokes your ex-spouse's appointment as agent under a power of attorney — but only once the divorce is final. EPTL 5-1.4 extends to powers of attorney and healthcare proxies in the same way it handles wills.

But before the divorce is final, those documents are still valid. Your estranged spouse — the person you're fighting with over assets and custody — may still have legal authority to manage your finances and make medical decisions for you.

Think about what that means. You're hospitalized after an accident during your divorce. Your spouse, who you haven't spoken to in eight months, shows up with a valid healthcare proxy and starts making medical decisions. Your adult children from a previous relationship have no authority at all.

The fix is simple: execute new documents the moment you decide to separate. A new power of attorney naming someone you actually trust. A new healthcare proxy naming the right person to make medical decisions. These are inexpensive to execute and they revoke the prior documents immediately upon signing.

Don't wait for the divorce to be final. Update these the day you retain your divorce attorney.

What Is a QDRO and Why Does It Matter for Your Estate Plan?

A Qualified Domestic Relations Order (QDRO) is a court order that divides retirement account benefits between divorcing spouses. If your divorce settlement includes a division of a 401(k), pension, or other qualified retirement plan, a QDRO is how that division is legally implemented.

Here's what many people don't understand about QDROs and estate planning: QDROs have their own beneficiary designation rules. Once a QDRO assigns an interest in your retirement plan to your ex-spouse, that interest becomes their separate property. If your ex dies before receiving their share, that share may pass according to their estate plan — not yours.

Conversely, once you receive a QDRO share of your ex's retirement account, you need to update your own estate plan to address what happens to that account if you die. Name a new beneficiary on any QDRO-created account.

QDROs are technically complex documents. A poorly drafted QDRO can fail — which means the retirement plan administrator rejects it, and you're back to court. Always use an attorney who understands both the specific plan's requirements and New York divorce law.

Trusts and Divorce: Special Considerations

Revocable Living Trusts

If you and your spouse created a joint revocable living trust during your marriage, divorce creates immediate complications. The trust may hold significant marital assets. Typically, each spouse's interest in the joint trust becomes a marital asset subject to equitable distribution in the divorce.

After divorce, you'll need to either terminate the joint trust and create individual trusts, or amend the trust to remove your ex-spouse's rights. This requires coordination between your divorce attorney and estate planning attorney — and it should happen as quickly as possible after the divorce is final.

Irrevocable Trusts Created During Marriage

Irrevocable trusts you created during marriage may have named your spouse as a beneficiary. Because they're irrevocable, you generally can't just remove your ex-spouse as beneficiary after divorce. However, New York courts have in some cases recognized a constructive trust claim or equitable remedy when divorcing spouses can demonstrate the irrevocable trust was funded with marital assets.

This is complex territory. If you have an irrevocable trust with your ex-spouse as a current or remainder beneficiary, get specific legal advice on your options. The answers depend on how the trust was funded, what the trust terms say, and the specific circumstances of your divorce.

Trusts That Benefited Your Spouse but Shouldn't Now

Some people set up trusts during marriage that make distributions for the "benefit of my family." After divorce, does your ex still qualify as family under those terms? It depends on how the trust is drafted. Have your attorney review any trust documents to assess whether former-spouse language creates ambiguity.

The Full Estate Planning Checklist After Divorce in New York

Once your divorce is finalized — and ideally starting the day you decide to separate — work through every item on this list:

Immediate Steps (Day 1 of Separation)

1. Execute a new power of attorney naming a trusted person who is not your spouse.
2. Execute a new healthcare proxy naming the right person to make medical decisions.
3. Execute a new living will articulating your end-of-life wishes.
4. Review your will with your estate planning attorney and understand what would happen if you died today.

After the Divorce Is Final

1. Execute a new will. Don't rely on EPTL 5-1.4 to clean up your old will. Execute a fresh document that reflects your current wishes entirely.
2. Update 401(k) beneficiary designations. Contact your plan administrator and submit new forms.
3. Update IRA beneficiary designations. Each IRA custodian has its own process. Do each one separately.
4. Update life insurance beneficiaries. Contact each insurer. Get confirmation in writing.
5. Update annuity and pension designations. Same process as life insurance.
6. Update bank and brokerage account TOD/POD designations. Visit or call each institution.
7. Review any jointly held real estate. Understand whether you now own it as tenants in common or in some other form, and whether retitling is needed.
8. Address any trusts. Amend or terminate any joint trusts. Review all trust documents for spouse-beneficiary provisions.
9. Review guardianship designations. If you have minor children, your will should name a guardian for the event that both parents die. Reconsider who that should be.
10. Consider a new trust structure. If you now have more complex concerns — protecting assets for children from your marriage, planning for possible remarriage — a trust may be appropriate now even if it wasn't before.

Planning for Remarriage After Divorce

Many divorced clients eventually remarry. And remarriage creates a new round of estate planning questions. Two in particular come up constantly.

The Prenuptial Agreement Question

A prenuptial agreement can address the elective share right for the new marriage. If you want to protect assets for children from your first marriage, and you remarry someone with their own assets and children, a prenup that waives the elective share right on both sides — combined with clear wills, trusts, or beneficiary designations — keeps everyone's intentions clean.

We discuss this extensively in our guide to estate planning for blended families.

The "New Spouse Disinheriting My Kids" Problem

A common fear: you remarry, you leave everything to your new spouse, and your children from your first marriage get nothing. Or worse — you die first, your new spouse inherits everything, and then your new spouse leaves everything to their own children (cutting yours out entirely).

The solution is a QTIP trust. Your new spouse receives income from the trust for life. On their death, the principal passes to your children. Neither spouse feels cheated. Neither set of children gets left out. It's one of the most powerful tools in estate planning for second marriages. For more, see our discussion in the testamentary trust guide.

A Note on Separation Agreements and Estate Planning

Many couples sign a separation agreement months or years before the divorce is finalized. A good separation agreement addresses property division, support, and parental rights. A great separation agreement also includes:

• A mutual waiver of elective share rights (to eliminate the death-during-divorce risk)
• A mutual waiver of rights as surviving spouse in any pension or retirement account
• Clear provisions about joint property and how it's to be divided
• Instructions about joint life insurance policies

These provisions don't replace an updated estate plan. They're a belt-and-suspenders protection during the gap between separation and final divorce. Work with an estate planning attorney alongside your divorce attorney to ensure the separation agreement addresses these issues.

When to Get Legal Help

The honest answer is: right away. The moment you decide your marriage is ending, you should be talking to both a divorce attorney and an estate planning attorney. Not sequentially. Simultaneously.

I've seen too many people who spent years and hundreds of thousands of dollars in divorce proceedings, only to die before the divorce was final — leaving their estranged spouse as the primary beneficiary of everything. Or who completed the divorce but never updated their life insurance, so their ex collected a half-million-dollar payout ten years later.

Estate planning after divorce isn't complicated. But it requires attention. It requires actually picking up the phone and making the appointment.

For additional guidance on divorce and estate planning in New York, visit morganlegalny.com/estate-planning/.