For those of you who may be wondering if I fell off the end of the earth, your faithful law blogger has returned after a long vacation –and all of the work that needs to be done before and after a break (yes, it was worth it, but sometimes a bit hard to tell). Our state legislature, in a fairly uncharacteristic display of get-up-and-go, has given us an important new piece of legislation to digest this summer.
A major amendment has been made to Section 5-1.4 of the Estate Powers and Trusts Law. Formerly, although a judgment of divorce worked to disinherit a former spouse automatically, non testamentary assets such as totten trusts or life insurance policies remained unaffected and, if one forgot or neglected to remove a former spouse as beneficiary of such assets, these assets would pass upon death as if there had been no divorce. Now, these dispositions are also automatically revoked by a judgment of divorce. The change in the law therefore virtually eliminates testamentary substitutes in the event of divorce.
This revision applies to all divorces and annulments taking place after the law’s effective date this past July. Beware however that where the dispositions, nominations or appointments do not take effect until the death of the giver, these will also be revoked. Therefore , it is necessary to revisit the wills and various dispositions made by clients prior to the effective date. If, for any reason, it is necessary or desirable to maintain the viability of these provisions, a new agreement speaking specifically to them should be explored. At first impression, this would appear to include life insurance since the company’s obligation to pay obviously does not become operative until death.