A divorce in Texas does NOT invalidate a will executed prior to the divorce but does invalidate bequests to the former spouse thereby changing the estate plan. The effect of the divorce is that the will shall be read as if the former spouse and the former spouse’s relatives failed to survive the decedent.
Section 123.001 of the Texas Estates Code addresses will provisions made before a divorce and provides that if, after the testator makes a will, the testator’s marriage is dissolved by divorce, annulment, or a declaration that the marriage is void, unless the will expressly provides otherwise:
(1) all provisions in the will, including all fiduciary appointments, shall be read as if the former spouse and each relative of the former spouse who is not a relative of the testator had failed to survive the testator
In plain English, a former spouse and the former spouse’s relatives (only related to the former spouse) are treated has having died before the testator for purposes of distribution under the will, and for purposes of fiduciary appointments under the will. An exception exists if the will explicitly states that in case of divorce the former spouse and relatives will still inherit. Texas law implements this effect on the estate plan to do what the law believes the testator would have wanted to do upon divorce, but did not.
What is The Effect of A Texas Divorce on A Trust?
The effect of divorce in Texas on a trust instrument created prior to the divorce depends on whether the trust is revocable or irrevocable. Divorce effects a Texas revocable trust, but not an irrevocable trust estate plan.
Section 123.001 of the Texas Estates Code states:
(2) all provisions in the will disposing of property to an irrevocable trust in which a former spouse or a relative of a former spouse who is not a relative of the testator is a beneficiary or is nominated to serve as trustee or in another fiduciary capacity or that confers a general or special power of appointment on a former spouse or a relative of a former spouse who is not a relative of the testator shall be read to instead dispose of the property to a trust the provisions of which are identical to the irrevocable trust, except any provision in the irrevocable trust:
(A) conferring a beneficial interest or a general or special power of appointment to the former spouse or a relative of the former spouse who is not a relative of the testator shall be treated as if the former spouse and each relative of the former spouse who is not a relative of the testator had disclaimed the interest granted in the provision; and
(B) nominating the former spouse or a relative of the former spouse who is not a relative of the testator to serve as trustee or in another fiduciary capacity shall be treated as if the former spouse and each relative of the former spouse who is not a relative of the testator had died immediately before the dissolution of the marriage.
In sum, just like with a will executed prior to the divorce, a revocable trust executed prior to the divorce will be read as if the former spouse and former spouse’s relatives disclaimed their interests, and they will not inherit.
Irrevocable trusts as an estate planning tool are treated differently for purposes of divorce in Texas. If a decedent created an irrevocable trust, the former spouse and related beneficiaries inherit regardless of the divorce. This is because an irrevocable trust was irrevocable from the moment it was signed, and presumably the irrevocable nature of the trust was exactly what the Texas decedent wanted for the estate plan, regardless of a possible divorce.
Can An Ex-Spouse Collect Life Insurance Benefits Under Texas Law?
No. Upon divorce, a former spouse’s beneficiary status on life insurance policies is automatically revoked. There are three exceptions to this rule. Pursuant to Texas Family Code § 9.301:
(a) If a decree of divorce or annulment is rendered after an insured has designated the insured’s spouse as a beneficiary under a life insurance policy in force at the time of rendition, a provision in the policy in favor of the insured’s former spouse is not effective unless:
(1) the decree designates the insured’s former spouse as the beneficiary;
(2) the insured redesignates the former spouse as the beneficiary after rendition of the decree; or
(3) the former spouse is designated to receive the proceeds in trust for, on behalf of, or for the benefit of a child or a dependent of either former spouse.
Can An Ex-Spouse Collect Retirement and Other Financial Plan Benefits Under Texas Law?
No. Pursuant to §9.302 of the Texas Family Code, if a decree of divorce or annulment is rendered after a spouse, acting in the capacity of a participant, annuitant, or account holder, has designated the other spouse as a beneficiary under an individual retirement account, employee stock option plan, stock option, or other form of savings, bonus, profit-sharing, or other employer plan or financial plan of an employee or a participant in force at the time of rendition, the designating provision in the plan in favor of the other former spouse is not effective.
The same exceptions exist as for a life insurance policy. A bequest to a former spouse is not effective unless:
- The decree designates the former spouse as the beneficiary;
- The designating former spouse redesignates the former spouse as the beneficiary after the rendition of the decree
- The other former spouse is designated to receive the proceeds or benefits in trust for, on behalf of, or for the benefit of a child or dependent of either former spouse.
Even though Texas law addresses the effect of a divorce upon the estate plan, it is always a good idea to revisit your estate planning and beneficiary designations after a divorce, rather than have Texas law deal with the effect of the divorce for you upon death. If you are in the midst of a divorce and pass away before the divorce is final, your spouse will be entitled to all surviving spouse rights available under Texas law.
