How Divorce Affects Your Kentucky Estate Plan

The end of a marriage marks a profound shift in every aspect of your life. Amid the emotional and logistical challenges of separating households and dividing assets, one of the most significant yet frequently overlooked tasks is revising your estate plan. The legal documents you created with your spouse, designed to protect your shared future, are now dangerously out of date. Failing to address your will, trusts, and beneficiary designations can lead to unintended and often heartbreaking consequences, potentially placing your assets directly into the hands of the person you just legally separated from.

Why is it so important to update your estate plan after a divorce?

Finalizing a divorce is a major legal step, but it doesn’t automatically update other important legal documents you have in place. Many people assume that once the judge signs the divorce decree, their ex-spouse is removed from everything. That is a dangerous assumption. In Kentucky, a divorce will invalidate certain provisions in your will that benefit a former spouse, but it has no effect on many other asset transfer mechanisms.

Without proactive changes, your ex-spouse could remain in a position of significant authority and financial benefit. For example:

Beneficiary Designations: These often override a will. If your ex-spouse is still listed as the beneficiary on a life insurance policy or retirement account, they will likely receive those funds, regardless of what your will says.
Powers of Attorney: If you named your former spouse as your agent in a power of attorney for finances or healthcare, a divorce does not automatically revoke that authority. This could give them the power to manage your finances or make life-or-death medical decisions if you become incapacitated.
Property Ownership: How property is titled matters. If you and your ex-spouse owned a home as joint tenants with right of survivorship, they could automatically inherit the entire property upon your death if the title was not changed during the divorce.

Failing to update your plan creates a situation where your intentions are no longer aligned with your legal reality. The result can be painful and expensive legal battles for your heirs as they try to sort out an outcome you never would have wanted.

Your Last Will and Testament: A Partial Fix

Your will is the cornerstone of your estate plan, directing how your probate assets should be distributed. Probate assets are those titled solely in your name without a designated beneficiary. Kentucky law provides a partial safety net regarding a will after a divorce.

According to Kentucky Revised Statute 394.092, if you get divorced after executing your will, any provisions in that will that benefit your former spouse are revoked. This includes any bequest of property and any nomination of your ex-spouse to serve as the executor of your estate. The law essentially treats your ex-spouse as if they had passed away before you.

While this statute is helpful, relying on it is not a sound strategy.

It creates ambiguity. The law revokes provisions for the ex-spouse but leaves the rest of the will intact. This can sometimes create confusion about how assets should be distributed, potentially leading to disputes among your other beneficiaries.
It does not account for new wishes. Your old will was written for a different life. A divorce changes your family structure and your financial picture. You may want to name new beneficiaries, change how assets are distributed to your children, or appoint a new person to manage your estate.
It does not cover all scenarios. If your divorce is not yet final when you pass away, the old will is still in full effect. Your soon-to-be-ex-spouse would still inherit according to its terms.

The cleanest and most effective solution is not to rely on a legal default but to execute a completely new will after your divorce is finalized. This removes all doubt, clearly states your current wishes, and provides a clear roadmap for your loved ones to follow.

The Critical Danger of Outdated Beneficiary Designations

Perhaps the most common and costly mistake people make post-divorce is failing to update their beneficiary designations. Many of the most valuable assets people own are “non-probate” assets, meaning they pass outside of the will directly to the person named as a beneficiary.

Beneficiary designations on these accounts trump whatever your will says.

The Kentucky statute that revokes provisions for an ex-spouse does not apply to beneficiary designations. This means if you forget to remove your ex-spouse from your 401(k), they will get the entire account, even if your new one leaves everything to your children or a new partner. This is a matter of contract law between you and the financial institution, and they are legally obligated to pay the named beneficiary.

It is absolutely essential to review and change the beneficiaries on the following types of accounts:

Life Insurance Policies: Both individual policies and those provided through an employer.
Retirement Accounts: This includes 401(k)s, 403(b)s, IRAs (Traditional and Roth), and pensions.
Bank Accounts: Checking and savings accounts with a “Payable on Death” (POD) designation.
Investment Accounts: Brokerage accounts with a “Transfer on Death” (TOD) designation.
Annuities: These financial products almost always have named beneficiaries.

To change a beneficiary, you must contact each financial institution or plan administrator directly and complete their specific forms. Do not assume your divorce attorney handled this; it is typically outside the scope of the divorce proceeding itself and is your personal responsibility.

Who Holds Power? Re-evaluating Your Powers of Attorney

An estate plan is not just about what happens after you die. It also protects you if you become incapacitated and unable to make decisions for yourself. This is where powers of attorney come into play.

Durable Power of Attorney (Financial): This document appoints an “agent” to manage your financial affairs—pay bills, handle investments, manage property—if you cannot.
Healthcare Power of Attorney: This appoints a healthcare surrogate to make medical decisions on your behalf if you are incapacitated. This is often paired with a living will, which outlines your wishes regarding end-of-life care.

It is very common to name a spouse as the agent in these documents. Unlike a will, a divorce in Kentucky does not automatically revoke a power of attorney. If your ex-spouse is still named as your agent, they could legally step in and take control of your finances and medical care. To prevent this, you must formally revoke the old documents and execute new ones naming a person you currently trust.

Protecting Your Children: Guardianship and Trusts

For parents of minor children, a divorce brings new considerations for their care and financial well-being.

Nominating a Guardian: Your will is the legal document where you can nominate a guardian for your minor children if both parents are deceased. While the surviving parent usually retains custody, it is important to have a plan in place for a worst-case scenario. After a divorce, you should review this nomination. Do you and your ex-spouse agree on who should raise your children if something happens to both of you? Clarifying this in a new will can prevent family disputes down the road.
Managing Inheritances: You likely do not want your minor children to inherit a large sum of money outright. Furthermore, you may not want your ex-spouse to be the person who manages the money your children inherit from you. You can address this by creating a trust in your will (a “testamentary trust”) or a separate living trust. You would name a trustee—a trusted sibling, parent, or financial institution—to manage the inheritance for your children’s benefit until they reach a certain age. This ensures the funds are used responsibly for their education, health, and welfare, managed by someone you choose.

What Happens to a Trust After a Divorce?

Trusts are powerful estate planning tools often used to avoid probate, manage assets, and provide for beneficiaries. How a divorce impacts a trust depends on its type.

Revocable Living Trusts: These are the most common type of trust. As the name implies, they can be changed or revoked by the person who created them (the grantor). If you and your ex-spouse created a joint revocable trust, it must be addressed during the divorce. Typically, the trust is dissolved, and the assets are divided. You would then create a new, individual trust to hold your separate assets.
Irrevocable Trusts: These trusts generally cannot be changed once they are created. If you or your ex-spouse are beneficiaries of an irrevocable trust (perhaps one set up by a parent), it is usually considered separate, non-marital property. If you created an irrevocable trust during the marriage for the benefit of your spouse, modifying it can be very difficult and may require court intervention.

Reviewing any existing trusts with an attorney is a necessary step to see how they fit into your new post-divorce financial landscape.

Your Post-Divorce Estate Planning Checklist

Taking action can feel overwhelming, but breaking it down into manageable steps makes the process clearer. Here is a checklist to guide you as you update your estate plan.

Gather Your Documents: Collect copies of your existing will, trusts, powers of attorney, life insurance policies, and retirement account statements.
Review Your Divorce Decree: Your settlement agreement may contain specific requirements, such as mandating you maintain a life insurance policy for the benefit of your children or ex-spouse. Your new estate plan must comply with these legal obligations.
Execute a New Will: Work with an attorney to draft and formally execute a new will that reflects your current wishes for your probate assets and nominates a new executor.
Update All Beneficiary Designations: Contact every financial institution and request the forms needed to change the beneficiaries on your life insurance, retirement accounts, bank accounts, and investment accounts.
Revoke and Create New Powers of Attorney: Formally revoke your old durable and healthcare powers of attorney and execute new ones appointing agents you trust today.
Amend or Restate Your Trust: If you have a revocable living trust, work with your attorney to amend it to remove your ex-spouse or, more commonly, to restate it entirely as a new individual trust.
Check Property Titles: Confirm that any real estate you retained in the divorce is titled correctly in your sole name to avoid any issues of joint ownership with right of survivorship.

Secure Your Future with John H. Ruby & Associates

A divorce is the end of one chapter and the beginning of another. Ensuring your legal and financial house is in order is one of the most empowering steps you can take as you move forward. Updating your estate plan protects your autonomy, provides for the people you care about most, and ensures the legacy you leave behind is the one you intended. The legal team at John H. Ruby & Associates is dedicated to providing clear, compassionate guidance through every stage of a family transition.

If you are ready to build an estate plan that reflects your new beginning, we are here to help. Schedule a consultation now by calling us at 502-895-2626 or reaching out online.