New Florida law nullifies ex-spouse's rights as designated beneficiay in certain non-probate assets

Florida law expands the automatic nullification of beneficiary designations to a former spouse upon divorce or dissolution marriage for certain nonprobate assets.

Prior to the recent enactment of section 732.703, the Florida Probate Code nullified provisions in a will or trust in favor of a former spouse if the deceased person (“decedent”) had signed the Will or Trust before the marriage was terminated by divorce or dissolution of marriage. However, the statutes did not affect the disposition of assets that passed to a former spouse who was named as a beneficiary of various nonprobate assets, such as insurance policies, IRA’s and brokerage accounts. That discrepancy resulted in litigation that was ultimately decided by the Florida Supreme Court, ruling that a former spouse was entitled to life insurance benefits despite a general release signed by the parties in a marital settlement agreement.

To rectify that discrepancy between the passing of probate and nonprobate assets, the Florida Legislature enacted section 732.703, which became effective on July 1, 2012. The new statute voids the designation of a former spouse as a beneficiary of an interest in an asset that would pass to the former spouse upon the death of the decedent if:

  • The decedent’s marriage was judicially dissolved or declared invalid before the decedent’s death; and
  • The designation was made before the dissolution or order invalidating the marriage.

If those conditions are met, then the decedent’s interest in the asset will pass as if the decedent’s former spouse predeceased the decedent.

The nonprobate assets affected by the statute include:

  • a life insurance policy, qualified annuity, or other similar tax-deferred contract held within an employee benefit plan;
  • an employee benefit plan;
  • an individual retirement account;
  • a payable-on-death account;
  • a security or other account registered in a transfer-on-death form; and
  • a life insurance policy, annuity or other similar contract that is not held within an employee benefit plan or tax-qualified retirement account.

However, the statute does not void a beneficiary designation in the following instances:

  • to the extent federal law provides otherwise;
  • if the governing instrument as defined in the bill expressly provides that the interest will be payable to the designated former spouse after the order of dissolution or order declaring the marriage invalid and the instrument expressly provides that benefits will be payable to the decedent’s former spouse;
  • to the extent the disposition of the assets are governed by a will or trust;
  • if a court order required the decedent to acquire or maintain the asset for the benefit of the former spouse or children of the marriage;
  • if under terms of the order of dissolution or order declaring the marriage invalid, the decedent did not have the ability to unilaterally terminate or change the beneficiary or pay-on-death designation;
  • if the designation of the decedent’s former spouse as beneficiary is irrevocable under applicable law;
  • if the contract or agreement is governed by the laws of another state;
  • to an asset held in two or more names as to which the death of one co-owner vests ownership of the asset in the surviving co-owner or co-owners; or
  • if the decedent remarries the person whose interest would otherwise have been revoked as a former spouse under the bill and the decedent and that person are married to one another at the time of the decedent’s death.
  • for state-administered retirement plans under chapter 121, Florida Statutes.

Even though the Legislature has tried to save the unwary from an unintended disposition of his or her assets, you should review your estate planning documents upon any and all major life events, including births, divorce, marriage and deaths. Such a review with your attorney will insure that your assets will pass to your intended beneficiaries.

Older Floridians Handbook – a good online resource

The Older Floridians Handbook is a reference source and guide for older Floridians. It contains useful legal and program information on topics of special interest to persons over sixty years of age, but by no means is it limited in value only to older adults. Persons of all ages should find the Handbook informative and helpful.

The material provided is based on the laws and practices of the State of Florida and its agencies, and in some cases, the laws and practices of the federal government. The Handbook cannot answer every question, nor can it replace the advice and counsel of an attorney when needed. Rather, it provides information of a general nature and answers to some of the more common questions asked by older Floridians.

You should be aware that the Handbook describes laws and programs that may change from time to time.  Consequently, dollar amounts and other details may change, usually on a yearly basis — particularly, figures used to determine eligibility for various programs and the amounts of benefits the programs provide.

The Older Floridians Handbook is available from the Senior Resource Alliance web site:  http://www.seniorresourcealliance.org/information/older-floridians-handbook/