Jill Mastroianni (00:00): When you divorce in Tennessee, your Will changes automatically but the beneficiaries on your retirement accounts and life insurance don’t. Podcast listener Amy’s question opens the door to some of the most confusing parts of estate planning, including real cases where ex-spouses walked away with hundreds of thousands of dollars after a death. This episode explains how to make sure your ex doesn’t accidentally inherit your money.

Welcome to the Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni, former estate attorney, current realist, and your guide to wills, trusts, probate and the conversations no one wants to have. If your Google search history includes, “Do I need a trust?” “What exactly is probate?” and “Am I supposed to do something with mom’s Will?” you’re in the right place.

(00:56) Back in October, my husband and I bought a new house. And for months leading up to that closing, it felt like a second full-time job. I was on Zillow morning and night. My daughter and I did reconnaissance drive-bys on the way home from school. Every weekend we walked through various open houses. Eventually, we found a home we loved. We got the financing lined up, set aside the down payment, survived the inspection, and reminded the title company, again, that my husband and I are married despite having different last names and would like the deed to reflect that.

By the time we finally closed, I expected this huge emotional release. But instead, life just… kept going. Immediately.

We had to pack. Then do the rental-truck move. Then unpack. Then start tackling the inspection repairs. Then get our old house ready to rent. And even now, months later, we still haven’t changed the locks or updated the keypad code on the new house. I’m really embarrassed to admit that part about the locks.

(02:03) That sense of thinking the big moment would bring relief, only to find a stack of next steps waiting, is where today’s question-asker is too. She’s legally divorced but emotionally and financially worn down, and now facing the practical follow-through that comes after a divorce.

Today’s Tuesday Triage comes from Amy in Nashville, Tennessee. The judge recently signed off on her marital dissolution agreement, which means she and her husband—well, former husband—of ten years are officially divorced. It’s been a long and expensive journey for Amy to get to this finish line. And she has three young kids. What she really needs is a nap. Instead, she reached out to me.

Five years ago, Amy and her then-husband completed their estate planning. Now she’s wondering: Does she need to change her Will to remove her ex-spouse?

Amy, thank you for sending in this question.

(03:00) I know you’re asking about your Will, but let’s start with a couple of ancillary documents you probably completed along with your Will when you signed your estate planning documents 5 years ago, your healthcare and financial powers of attorney. These powers of attorney name the person who can make decisions for you if you can’t make them for yourself. And they’re form-driven documents that your attorney’s office can update quickly, often by a legal assistant, so the cost should be minimal. 

Under Tennessee law, unless you wrote something different into your healthcare power of attorney, your divorce automatically revokes your ex-spouse’s authority. The statute is clear. It says that once a marriage is dissolved or annulled, the former spouse is no longer your healthcare decision-maker. And just to be precise, a legal separation doesn’t count; it has to be a full divorce.

But even though Tennessee law automatically revokes your ex-spouse’s authority as your healthcare agent, it’s always better for the document to clearly reflect your wishes. You don’t want a medical provider having to guess that (1) you’re divorced, (2) the person named as your agent in your medical documents is your ex-spouse, and (3) the law revokes that designation upon divorce. Clean, updated paperwork removes uncertainty.

(04:17) The good news is that Tennessee offers a free, state-approved form you can fill out without spending anything, which I will link to in the show notes.

Now let’s talk about your financial power of attorney. If that document gave your ex-spouse authority to act for you, you’ll want to update it, too, unless your document specifically contains a clause revoking an ex-spouse automatically. But, like with the healthcare power of attorney, you don’t want a bank employee to have to determine that (1) you’re divorced, (2) the person named is your ex-spouse, and then (3) find the provision in your power of attorney revoking authority as to your ex-spouse.

The good news is that your original attorney should have the Word document for your powers of attorney. Updating the agent’s name is very easy, and it should take almost no time or expense.

(05:08) Now let’s talk about Amy’s Will, the document she wrote in asking about. Here, Tennessee law actually works in her favor. When you divorce, any gifts to your ex-spouse, and any nomination of them as executor or trustee, are automatically revoked. So while I do recommend updating your Will when you’re ready, it’s okay if you want to take a breath and save up before tackling that step.

There’s one thing I’d be remiss not to mention. In Tennessee, if you and your ex-spouse ever decide to remarry each other, any transfers that were automatically revoked at divorce will spring back into effect—unless you’ve updated your estate plan in the meantime. So if you reconcile, make sure your documents keep up.

But if you’ve been listening to the podcast for a while, you know estate planning doesn’t end with Wills and powers of attorney.

(06:09) A Will controls only your probate assets. For a deeper dive into understanding probate and non-probate assets, check out Episode 38: Why You Need (or Don’t Need) a Will. I’ll link to it in the show notes.

A surprising number of people don’t have any probate assets at all. I’m one of them. I have a Will, but if my husband survives me, nothing I own would actually pass under that Will. Here’s what that looks like in real life for 4 different types of assets:

#1: Jointly owned assets

My husband and I own joint bank accounts and real estate together. When one of us dies, those assets pass automatically to the survivor by operation of law. The Will never even comes into play. Any property Amy owned jointly with her ex-husband should have been addressed during the divorce.

#2: Payable-on-death accounts 

(07:13) I also have a bank account where my husband Jeremy is listed as the payable-on-death beneficiary. If he outlives me, that account goes straight to him. If Amy has named her ex-spouse as a payable-on-death beneficiary, she would have to take additional steps to change this payable-on-death designation.

#3: Retirement accounts

My retirement accounts list Jeremy as the designated beneficiary. Those beneficiary designations are contractual. If he survives me, the retirement accounts go to him. What my Will says is irrelevant. Tennessee divorce law does not change these designations either. So again, Amy would need to change this.

#4: Life insurance

Same deal with life insurance. Jeremy is the named beneficiary, and the proceeds are paid directly to him if he survives me. Again, Tennessee does not automatically revoke these designations at divorce.

(08:15) Now, before we get back to Amy’s situation, I want to touch briefly on how divorce works in states other than Tennessee.

You may have heard of something called “automatic revocation on divorce.” 

Automatic revocation on divorce means that an ex-spouse is automatically removed as a beneficiary in certain situations. Tennessee automatically revokes your ex-spouse as a beneficiary under your Will. But other states, 26 the last time I checked, automatically remove a spouse as a beneficiary, not just in Wills, but also on certain retirement accounts and life insurance, once the divorce is final.

Here’s how these laws generally work: If you live in one of the 26 revocation-on-divorce states, your ex-spouse is automatically removed as beneficiary at the time of divorce. Your IRA, for example, would go to your contingent beneficiary or, if you don’t have one, the default beneficiary listed in the plan agreement.

(09:20) A good example is the United States Supreme Court’s 2018 decision in Sveen v. Melin. Mark Sveen bought a life insurance policy and named his wife Kaye as the primary beneficiary, with his two children from a prior marriage as contingent beneficiaries. Later, Mark and Kaye divorced, but Mark never updated the beneficiary form for his life insurance. When he died, Minnesota’s revocation-on-divorce law automatically removed Kaye. The United States Supreme Court upheld that automatic revocation law. The life insurance proceeds went to his children instead.

And just days after the Sveen ruling, the Supreme Court approved Arizona’s revocation-on-divorce law as applied to an IRA. 

(10:12) Now, here’s an important wrinkle: even if you live in a state with automatic beneficiary revocation laws, those laws do not apply to ERISA accounts, things like your 401(k), many pensions, and other federal plans. ERISA, which stands Employee Retirement Income Security Act, is a federal law, and it supersedes state law, like automatic revocation on divorce laws, when it comes to retirement plans.

So why is ERISA different?

When Congress enacted ERISA back in 1974, they included a “preemption clause,” which says that ERISA preempts, or supersedes, state law where there is a conflict between the two.

The idea was to spare large companies from having to juggle different rules in every state where they operate.

And the United States Supreme Court has interpreted the ERISA preemption clause to do just that.

(11:13) The 2001 case, Egelhoff v. Egelhoff, played out how preemption works. David Egelhoff named his wife, Donna, as beneficiary of his Boeing pension plan, an ERISA plan. They divorced, but David never updated the beneficiary form. After he died, the Supreme Court ruled that Washington state’s revocation-on-divorce statute was preempted by ERISA. In other words, the state revocation-on-divorce law was irrelevant as to an ERISA pension plan. Donna, the ex-spouse, still received the pension benefits.

So here’s the bottom line: State revocation-on-divorce laws can apply to IRAs because IRAs are not covered by ERISA. But those state revocation-on-divorce laws cannot touch ERISA accounts like 401(k)s.

(12:09) The bigger picture I want you to take away is that you should not rely on state law, to protect your family. The safest, cleanest approach is to update your beneficiary designations yourself. Make sure every IRA, 401(k), life insurance policy, and bank account reflects what you actually want, especially after a major life event like a divorce.

Now let’s get back to Amy’s situation and how all of this applies under Tennessee law.

Even though Tennessee doesn’t have automatic revocation-on-divorce statutes for retirement accounts or life insurance, many people think, “Well, my marital dissolution agreement handled everything. We waived rights to each other’s accounts. I’m covered.”

But that’s not necessarily true.

Remember: Tennessee law does revoke gifts and fiduciary appointments under a Will after divorce. What it does not revoke are non-probate assets—things like retirement accounts, life insurance, or payable-on-death bank accounts. Those pass by beneficiary designation, not by your Will.

(13:22) And the cases I’m about to walk you through deal exactly with those non-probate assets.

The first case involves the Estate of Michael Birdwell.

Michael and his ex-wife Tammy divorced in 2015. Their marital dissolution agreement said each spouse would keep the accounts in their own name. Specifically, it stated that Michael’s TIAA-CREF retirement account was his “sole and absolute” property.

Fast-forward to 2022: Michael was terminally ill. He still hadn’t changed the beneficiary on that retirement account, which listed Tammy as the beneficiary. From his deathbed, he signed a power of attorney giving another individual, Dr. Roberts, the authority to manage his finances and directed Dr. Roberts to change the beneficiary to Michael’s estate.

(14:14) TIAA refused to make the change because the power of attorney didn’t include the specific language they require to alter beneficiary designations.

And what did the court decide? The Tennessee Court of Appeals ruled that Tammy, the ex-spouse, was entitled to the full value of the account: $269,851.64.

The second case is Manning v. Manning, decided in 2016.

When Mr. Manning died, his ex-wife was still listed as the beneficiary of his retirement account. She refused to sign anything waiving her right to those benefits, so the estate sued.

Their marital dissolution agreement included two key promises:

1. Each spouse would “waive any interest” in the other’s retirement accounts, and

2. They would sign any documents quote “reasonably required” to carry out that agreement.

(15:17) The trial court initially ruled in favor of the ex-wife as the named beneficiary. But on appeal, the Tennessee Court of Appeals reversed. They held that even though Mr. Manning never updated the beneficiary form, the ex-wife had a continuing obligation to follow the marital dissolution agreement, including signing documents to effectuate the waiver.

So in Manning, the estate, not the ex-spouse, received the retirement account. That said, I’m not sure Manning would be decided the same way today.

You might be wondering: Is there a way around all of this? What if your marital dissolution agreement says, in plain English, that all beneficiary designations naming your ex-spouse are revoked?

In Tennessee, unfortunately, that doesn’t work.

(16:06) A 2017 Tennessee Court of Appeals case made this very clear. The court held that a marital dissolution agreement cannot revoke a retirement-plan beneficiary designation. Why? Because the only way to change a beneficiary on a retirement plan is to follow the plan’s own rules. If the plan requires the participant to submit a written change-of-beneficiary form to the plan administrator, that is the only valid method of changing a beneficiary designation. A divorce agreement, even a very detailed one, can’t take the place of that required form.

So, Amy, and anyone else listening: please don’t rely on the language in your marital dissolution agreement. Don’t scour it trying to find a loophole or a phrase that might rescue you from having to update your forms.

Just change your beneficiary designations.

Litigation is not free—not emotionally and certainly not financially. And remember, the Tennessee cases we just talked about went all the way to the Tennessee Court of Appeals. That means the families fought through the trial court and the appellate court before getting an answer.

(17:19) Save your loved ones the money, the stress, and the resentment. Update your beneficiary designations on your retirement accounts and your life insurance. And if you have any financial accounts where your ex is listed as a payable-on-death or transfer-on-death beneficiary, update those, too.

Yes, it takes a little time. But that time is nothing compared to the months, or years, your family could spend in court if you don’t.

Remember that new house story at the top of the episode? We moved two months ago, and I still haven’t changed the locks. The inspection repairs are waiting. The old house needs work. Life kept coming, and I just didn’t keep up. All of that made me feel behind.

But last night, my husband and I finally sat down, made a list, and built a schedule that feels reasonable for where we are right now. And that’s really the best we can do.

(18:14) Updating an estate plan after a divorce works the same way. You don’t have to fix every single thing today. You don’t have to complete all the follow-through tasks in one heroic burst. You just have to start. One form. One beneficiary change. One document updated.

Moving forward slowly is still moving forward.

And, if you’re feeling overwhelmed by the “after” part of divorce, you don’t have to untangle your estate plan alone. My Estate Plan Audit will show you where you stand and what steps to take next. Visit deathreadiness.com/audit to learn more. That’s deathreadiness.com/audit. 

Also, if you have a question you’d like me to answer on a future Tuesday Triage episode, submit it at deathreadiness.com/tuesdaytriage. That’s deathreadiness.com/tuesdaytriage. The link is in the show notes.

Thanks so much for listening today.

(19:14) This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.

Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast.  While my mom is an attorney, she’s not your attorney.  The Death Readiness Podcast is for educational and entertainment purposes only.   It does not provide legal advice.  For legal guidance tailored to your unique situation, consult with a licensed attorney in your state.  To learn more about the services my mom offers, visit DeathReadiness.com.