Death After Divorce – Financial Considerations

Death After Divorce – Financial Considerations  

If an ex-spouse dies after a divorce, and the legal and financial ties have not been properly severed, it can lead to unintended consequences. A signed divorce decree may end the marriage, but in many ways, separating the ties between the parties can be more difficult than it seems. The subsequent death of one spouse can highlight how tightly bound a divorced couple may still be. Below are some things to consider after a divorce is finalized.   


During the marriage, spouses commonly name each other as beneficiaries in wills, trusts, and other financial instruments.  

What happens to those beneficiary designations upon death?  

It’s complicated. Arizona has a revocation-upon-divorce statute. Upon divorce, state law revokes only some of those beneficiary designations.  

Now for the complication: The federal government has an anti-revocation-upon-divorce law. ERISA, the federal law that regulates employer-provided benefits, precludes states from automatically revoking certain financial instruments, such as 401(k)’s and pensions.   

This means that if the deceased spouse designated their ex-spouse as their beneficiary on their 401(k) or pension, the deceased spouse will receive those accounts despite the divorce. However, if the deceased spouse designated their ex-spouse as a beneficiary of their will or trust, state law will remove the deceased spouse as an heir. 

How do I remove an ex-spouse as the beneficiary of my 401(k)?  

You change your paperwork with your 401(k) company and update who the beneficiary is. Same holds true for other employer-provided benefits: pensions, federal retirement, profit-sharing plans, employer-initiated IRA’s, employer-provided life insurance policies, etc.  

Even though we’re now divorced, I want my ex-spouse to remain as an heir in my will. What can I do?  

You can re-execute the will after the divorce. That will get around the anti-revocation statute.  

Spousal Maintenance 

Commonly, spousal maintenance terminates upon a spouse’s death. Although this occurs in the vast majority of cases, there are exceptions to this rule. Under A.R.S. § 25-327(B), the death of a spouse will terminate the spousal maintenance requirement—but it has an exception. Spousal maintenance can continue beyond death only if the parties agree to it in writing or the Court expressly orders it.  

What does expressly mean here? “‘Expressly’ means in direct or unmistakable terms. The word ‘expressly’ is customarily defined as ‘directly and distinctly stated; expressed, not merely implied or left to inference.’”  In re Estelle’s Estate, 122 Ariz. 109, 113 (1979).  

It means that the Court order must clearly state that spousal maintenance lasts beyond death. See Palmer v. Palmer, 217 Ariz. 67, 71, ¶ 13 (App. 2007) (requiring the parties’ intention to continue spousal maintenance beyond a spouse’s death must be “unmistakably clear”).  

If no such order is made, the spousal maintenance obligation automatically terminates on the death of a spouse. 

Who does spousal maintenance go to after the death of the receiving spouse?  

If spousal maintenance is ordered as above to last beyond death, the installment payments are paid to the estate. The estate then distributes it to the heirs.  

What happens when the paying spouse dies?  

The recipient spouse generally must file a claim against the estate.  

What else can be ordered to protect the spouse receiving maintenance?  

Because, in most cases, spousal maintenance will terminate upon death (orders to pay beyond one’s death are rare), the parties commonly agree that the paying spouse will maintain a life insurance policy with other spouse named as the beneficiary throughout the spousal maintenance term. 

Importantly, if such a life insurance policy existed during the marriage, it must be re-executed post-divorce; otherwise, the ex-spouse’s designation as beneficiary may have been automatically revoked upon divorce.  

Child Custody 

Upon one parent’s death, the other parent will most likely receive full custody. Another person may seek third-party rights, including legal decision-making and placement. But to qualify, the third party will need to show that they stand in loco parentis to the child (i.e., the child essentially views them as a parent) and it would be significantly detrimental to remain in the surviving parent’s care. 

What if, in my will, I designate someone to be the custodian of the child. Will that be enough to prevent the other parent from getting custody? 

Most likely not. Both parents have a Constitutionally protected right to the care, custody, and control of the child. Those rights are not assignable. Upon your death, only the other parent holds those rights.   

Child Support 

Under A.R.S. § 25-327(C), when a parent who is required to pay child support dies, their obligation to pay child support does not terminate. Generally, though, the estate will pay a lump sum to fulfill the child support obligation. Under A.R.S. § 14-2404(B), the child support obligation (and spousal maintenance obligation) take precedence over all other claims except those related to the homestead allowance and the costs to administer the estate.  

But what happens if the parent receiving support dies and the child is placed with the third party? 

The paying parent will likely be ordered to pay child support to the child’s caregiver in accordance with A.R.S.§ 14-2404(A). 



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