Author: Dirk R. Moore
Divorce can create significant unintended consequences for wills, trusts, retirement accounts, life insurance policies, and beneficiary designations. Under Texas law, whether a divorce is finalized can directly impact who inherits assets, who serves in fiduciary roles, and how property is distributed if one spouse dies during the divorce process. Reviewing estate planning documents early with an experienced estate planning lawyer in Texas can help divorcing individuals protect their intentions, preserve assets, and avoid unnecessary disputes during an already difficult transition.
Divorce rates in the United States have steadily declined since peaking in 1980. According to research from the Pew Research Center, one contributing factor is the changing makeup of the married population, with higher levels of education correlating with lower divorce rates.
One notable exception to this trend is the continued rise of “gray divorces,” or divorces involving individuals over the age of 50. Pew Research Center data shows that gray divorces among women aged 50 and older increased significantly between 1990 and 2023.
As divorcing couples later in life often have more accumulated wealth, these matters frequently involve complex disputes over property characterization, including what qualifies as community property versus separate property. While many high-net-worth individuals may already have premarital or postmarital agreements in place, disagreements over the interpretation or applicability of those agreements are common. In many cases, disputes over property characterization become a strategic negotiation tool during divorce proceedings.
For financial advisors, accountants, divorce attorneys, and other trusted advisors, understanding the estate planning and probate implications of divorce can provide meaningful value to clients navigating these situations. Reviewing a client’s estate plan should be a standard part of any divorce-related checklist, regardless of the client’s age or net worth.
Key Estate Planning Considerations During Divorce
There is a reason people often say that “death and taxes” are the only guarantees in life. While taxes may be predictable, the timing of death is not. That reality makes estate planning an important consideration for anyone going through a divorce.
Clients should understand how their estate plan would operate if either spouse were to pass away before a divorce is finalized, during the divorce process, or after a final divorce decree has been entered. Planning for these possibilities can help avoid unintended outcomes and provide greater certainty during an already difficult transition.
Under Texas law, several provisions within the Texas Estates Code address situations where an individual fails to update estate planning documents after a final divorce decree has been entered.
Former Spouses and Estate Plans
Texas statutory law includes several provisions which provide, with some limited exceptions, that a decedent’s former spouse and relatives of the former spouse (who are not also relatives of the decedent) do not inherit or serve in a fiduciary role for the decedent or the decedent’s estate, including the following:
- Texas Estates Code Sections 123.001 and 123.002 limit provisions benefiting or appointing a former spouse (and relatives) when the decedent’s estate plan was not updated after divorce;
- Texas Estates Code Sections 123.052 and 123.056 provide similar limitations with respect to revocable trusts;
- Texas Estates Code Section 123.151 addresses survivorship and beneficiary designations connected to multiple-party accounts, including Payable on Death (POD) accounts and Joint Tenants with Rights of Survivorship (JTWROS) accounts, similarly limiting a decedent’s former spouse or their relatives from taking; and
- Texas Family Code Sections 9.301 and 9.302 address beneficiary designations on life insurance policies, retirement plans, and certain employer-provided financial benefit plans.
There are exceptions – such as when such a former spouse or their relative is ordered by a court to be designated as beneficiary as part of the divorce (including pursuant to a settlement agreement between the parties), or when the instrument benefitting the former spouse is put into place after the divorce.
Most importantly is that these statutory provisions apply only after a divorce has been finalized by entry of a final signed divorce decree. Prior to that, current Texas law would likely result in the parties being considered legally married for probate and inheritance purposes. Because of this, addressing estate planning issues before filing for divorce can be critical.
Reviewing Existing Estate Plans
One of the first questions divorcing clients should consider is what, if any, estate planning they have in place, including:
- A will
- A revocable trust or pour-over will
- Life insurance policies
- Retirement accounts such as IRAs and 401(k)s
- POD accounts
- JTWROS accounts
- Other non-probate assets with beneficiary designations
It is surprisingly common for individuals with substantial assets or minor children to have little or no estate planning documentation in place. When someone dies without a valid will in Texas, the Texas Estates Code determines how their property will pass through intestate succession laws.
In many cases, divorcing individuals do not intend for their estranged spouse to inherit their assets once the divorce process has begun. However, temporary orders are commonly entered during divorce proceedings prohibiting changes to estate plans, beneficiary designations, account ownership structures, or asset transfers until the divorce is finalized.
As a result, waiting too long to address estate planning issues can create significant unintended consequences if a death occurs before the final divorce decree is entered.
Why Timing Matters
The period between separation and the entry of a final divorce order can create substantial legal uncertainty. Estate planning discussions should occur early in the process, so clients fully understand:
- Who would inherit assets if they died unexpectedly
- Whether existing beneficiary designations remain in effect
- What restrictions may apply once divorce proceedings begin
- Whether updates should be made before filing
For clients navigating divorce, proactive estate planning is not simply a legal formality. It is an important step toward protecting family, preserving assets, and creating clarity during a major life transition.
Divorce and estate planning are deeply connected, particularly for individuals and families with significant assets, business interests, or complex financial structures. Waiting until after divorce proceedings begin to review estate planning documents can create unintended consequences and severely limit the ability to address these matters that may impact beneficiaries, fiduciary appointments, and the ultimate distribution of assets.
By addressing estate planning early, clients can better protect their intentions, preserve family wealth, and reduce uncertainty during an already difficult transition. Whether reviewing wills, trusts, beneficiary designations, or non-probate assets, proactive planning can provide clarity and help avoid costly disputes if the unexpected occurs before a divorce is finalized.
For divorcing clients and the professionals advising them, estate planning should not be treated as a secondary issue. It should be an essential part of the overall strategy moving forward. Working with experienced estate planning counsel can help divorcing clients navigate complex probate, beneficiary designation, and asset protection issues before they become costly disputes.
