CDA CDA Estate Planning & Post-Divorce Financial Transition

Question 1

After a divorce is finalized, what is the most critical estate planning action a client should take immediately?

Accepted Answer

Update all beneficiary designations on retirement accounts, life insurance, and financial accounts

Answer

Draft an entirely new will from scratch with an estate planning attorney

Answer

Transfer all individually held assets into a revocable living trust

Answer

File a new tax return using single filing status to update federal records

Question 2

In many U.S. states, what happens to testamentary provisions in a will that name an ex-spouse after divorce is finalized?

Accepted Answer

Many states automatically revoke bequests to an ex-spouse by statute upon divorce

Answer

The entire will is voided and the estate passes under state intestacy laws

Answer

The ex-spouse retains all bequests named in the will unless the will is rewritten

Answer

A probate court must approve any post-divorce changes to an existing will

Question 3

Why do beneficiary designations on retirement accounts and life insurance policies override a divorce decree?

Accepted Answer

Because ERISA and insurance contract law make beneficiary designations contractual obligations that supersede court orders

Answer

Because state divorce courts lack jurisdiction over any federally regulated financial accounts

Answer

Because beneficiary designations are recorded with the IRS and take priority under federal tax law

Answer

Because insurance contracts are not considered marital property under any state law

Question 4

A client named their ex-spouse as primary beneficiary on a $500,000 life insurance policy and died before updating it. What is the likely outcome?

Accepted Answer

The ex-spouse would likely receive the proceeds because the beneficiary designation controls

Answer

The divorce decree would automatically redirect the proceeds to the client's children or estate

Answer

The state would distribute the proceeds under intestacy laws since the marriage ended

Answer

The proceeds would be frozen by the court pending litigation among potential claimants

Question 5

What is a 'transfer on death' (TOD) or 'payable on death' (POD) designation and why must it be updated after divorce?

Accepted Answer

A designation on financial and brokerage accounts that passes assets directly to named beneficiaries outside of probate

Answer

A court order that transfers assets to heirs as part of the probate process

Answer

A type of irrevocable trust used specifically in post-divorce estate planning

Answer

A deed that transfers ownership of real estate to named heirs at the owner's death

Question 6

Which legal document gives someone authority to make financial decisions on your behalf if you become incapacitated, and why must it be updated after divorce?

Accepted Answer

A durable power of attorney, which grants financial decision-making authority and must be updated to remove an ex-spouse

Answer

A living will, which directs end-of-life medical treatment preferences

Answer

A revocable living trust, which holds and manages assets during incapacity

Answer

A healthcare proxy, which authorizes someone to direct medical treatment decisions