Change to Florida Divorce Law Impact on Retirement, Life Insurance, Annuities, etc.

Written by: Lenorae Atter, Attorney at Law

In a Florida divorce all assets and debts are to be equally divided regardless of fault of a spouse. Financial items such as annuities, retirement planning accounts, life insurance payouts that like are to be divided equally between the parties, if they were accumulated during the marriage. However, Florida did not have a law in place to automatically void or nullify assets as listed above in the event of the death of a party. For example, if an annuity was held in one spouse’s name and awarded to that spouse in the divorce, but she/he failed to change the beneficiary and she/he subsequently died, then the beneficiary remained the other spouse. As of July 1, 2012, that is no longer the law in Florida. Effective July 1, 2012, Florida law now has a post-divorce automatic nullification for beneficiary-designated non-probate assets (i.e. those assets that do not have to pass through probate upon the death of a party since). Such assets are as follows: life insurance, annuities, pay-on-death accounts, and retirement planning accounts.

While Florida previously recognized laws that automatically cut-out the divorced spouse from a will and from a revocable trust, there were no laws in place to cover the issue of accounts like life insurance. Previously, the recovable trust was the estate planning tool most common for individuals, so the laws made sense until other options became more readily available and popular. Over the years, financial planning and retirement accounts have grown in popularity and protecting them from a divorce has been a concern for many during the divorce and post-divorce process.

Florida Statute 732.703 is designed to apply only to the following type of accounts;
1. Life insurance policy, a qualified annuity, or other similar tax-deferred contract held within an employee benefit plan;
2. An employee benefit plan;
3. An individual retirement account;
4. A payable-on-death account;
5. Security or other account registered in a transfer-on-death form; and
6. Life insurance policy, annuity or other similar contract that is not held within an employee benefit plan or tax-qualified retirement account.

Florida Statute 732.703 provides for the following actions:

1. Upon the divorce or annulment of spouses, the statute nullifies the other spouse as a beneficiary of non-probate assets like life insurance, retirement accounts, pay on death account, etc. However, state-administered retirement plans are exempt from Florida Statute 732.703.

2. Florida Statute 732.703 provides the blueprint for a payor of a non-probate asset to use in the identification of the appropriate beneficiary and specifically sates that the payor is not liable in certain situations for transferring an asset to the beneficiary identified through the Statute’s blueprint/criteria

3. The Statute further voids the designation of a former spouse as a beneficiary of interest in an asset that will be transferred or paid upon death of the ex-spouse if: (a) The marriage was legally dissolved (i.e. final divorce decree) or the marriage was declared invalid before the decedent’s death (i.e. annulment was entered by the court); and (b) The designation of the spouse beneficiary was made before the dissolution or order invalidating the marriage.

If you are going through a divorce and have questions regarding your estate planning accounts and/or how such items may be divided in a divorce or annulment, then you should speak with an experienced family law attorney and/or estate planning attorney to find out more information and to protect your rights and options.