Divorce and Wealth Strategy – Closing the Gaps

Divorce is a major life transition—emotionally, legally, and financially. Even people who are organized and financially savvy often feel depleted by the process. When you’re focused on getting through each day and resolving immediate issues, it’s easy for important details to fall through the cracks.

That’s understandable. But divorce is also a rare moment when most financial and legal documents are already being reviewed. It creates a valuable opportunity to step back and make sure everything truly reflects your intentions—especially when it comes to estate planning and beneficiary designations.

A recent New Jersey case illustrates why this matters.

A Real-World Example with Lasting Consequences

In re Estate of Michael D. Jones, 259 N.J. 584 (2025):

During his marriage, Michael Jones purchased U.S. savings bonds and named his wife, Jeanine Jones, as beneficiary. After the parties divorced, the bonds were never specifically addressed in their settlement agreement.

New Jersey law (N.J.S.A. 3B:3-14) generally revokes beneficiary designations in favor of a former spouse once a final judgment of divorce is entered. The purpose of the statute is to prevent someone from unintentionally benefiting an ex-spouse after divorce.

However, that protection is not universal.

The statute does not apply to assets governed by federal law, including many retirement accounts and U.S. savings bonds. In the Jones case, the former spouse remained the beneficiary—despite the divorce—because the designation was never changed.

The result was likely not what the decedent intended and could have been avoided with a careful review during or after the divorce process.

Why Relying on the Law Isn’t Enough

Default rules are designed to help, but they are no substitute for intentional planning. The safest and most efficient approach is to review and update estate planning documents and beneficiary designations either during the divorce or immediately afterward.

This proactive step helps:

• Prevent assets from passing to unintended recipients
• Reduce confusion and administrative work for executors and family members
• Avoid delays, disputes, and unnecessary legal expenses

People are permitted to execute new wills during divorce. Until the final judgment is entered, the parties are still legally married, which makes timing and strategy especially important.

Life Insurance, Support Obligations, and Beneficiaries

Life insurance is frequently used in divorce agreements to secure alimony or child support. Depending on the circumstances, a settlement agreement may create a new insurance obligation or continue one that existed during the marriage. These contractual obligations are not affected by the revocation statute.

One detail that is often overlooked: a minor child cannot be named directly as a beneficiary of a life insurance policy. Instead, the policy must name a custodian or a trust. Thoughtful planning here can prevent court involvement later and ensure funds are managed as intended.

When Former Spouses Intentionally Remain Beneficiaries

Some couples choose—thoughtfully and intentionally—to continue leaving assets to one another after divorce. This may be done to support children, preserve family stability, or honor long-standing personal goals.

In those situations, action is still required. New estate planning documents and beneficiary designations must be completed after the divorce so the revocation statute does not override those wishes.

A Thoughtful, Coordinated Approach

Divorce is more than a legal proceeding—it is a turning point that affects your future and the people you care about most. Addressing estate planning during this time requires coordination and perspective.

Tanya N. Helfand , a Certified Matrimonial Attorney and Certified Divorce Financial Analyst, works collaboratively with financial planners, estate planning attorneys, and accountants to help clients navigate divorce with clarity, confidence, and a long-term view. The goal is not just to resolve the present, but to protect what comes next—for you and for those who depend on you.