In October, 2010, Governor Rendell signed into law Act No. 85 which amended Title 15 and 20 of the Pennsylvania Code to address the death of a party during divorce proceedings. Previously, the Divorce Code was amended to reflect the fact that if a party to a divorce dies after grounds have been established, then equitable distribution is to proceed as normal with the decedent’s estate stepping into the shoes of the deceased party and that the Court should apply the normal equitable distribution factors in deciding the case.
In updating the Decedent’s Estate and Fiduciary’s Code, not only is this area of law reflective of the current Divorce Code, but it also spells out more specifically for estate purposes the manner in which a divorcing party’s estate is to be distributed during litigation. Specifically, Title 20 was amended to reflect the fact that a spouse will have no right or interest in the real or personal estate of the other spouse if they die during the course of the divorce proceedings and after grounds have been established for the divorce. Furthermore, Section 2507 now reflects that any provision in a party’s Will that favors or relates to that party’s spouse shall “become ineffective for all purposes unless it appears from the Will that the provision was intended to survive a divorce…” This Section goes on to give exceptions to this rule, including situations in which the parties are divorced prior to the creation of the Will (which would reflect specific intent to allow the benefit to pass to the ex-spouse) or if the provision was specifically intended to survive the divorce.
Furthermore, if there is a conveyance that is revocable by a conveyor at the time of that person’s death that favors or relates to the conveyor’s spouse, this conveyance will become ineffective if the conveyor dies during the course of the divorce proceedings, no Divorce Decree has been entered, and grounds have been established. In other words, if a spouse dies and has designated the other spouse as the beneficiary of a life insurance policy, retirement plan, or other type of asset, that spouse may not receive the proceeds from those accounts if a Decree of Divorce has been entered or the divorce proceedings are pending. The exception, as with previous sections, is that there must be language to indicate that the payments were intended to survive the divorce. The practical application of this provision is that a codicil to a Will or revised benefit designation form is no longer necessary to preserve this benefit from being distributed to an estranged spouse; the Code now severs the passing of that benefit to the estranged spouse, unless the conveying spouse specifies otherwise. As such, a spouse who has beneficiary designations will find them nullified if the other party dies while the divorce is pending. The beneficiary designation will be declared ineffective unless specifically intended to survive the divorce.
Though the estate code may offer safeguards against assets being passed to an estranged spouse, it does not diminish the importance of changing the beneficiary designation early in the divorce proceeding, particularly if grounds for divorce – the triggering event for the Divorce and Estate Codes – have not yet been established. Consult with an attorney to determine what can be done to ensure that your benefits pass to those heirs who reflect your present intentions rather than past intentions.