Florida Banking December 2022/January 2023

732.703(4). The Revocation Statute also does not apply to state administered retirement plans under Chapter 121. §732.703(4)(j) Other exceptions to the Revocation Statute allow a Florida resident who wants to maintain, or is required to maintain, his or her former spouse as the beneficiary of a life insurance policy, retirement account or other non-probate asset to avoid revocation of the beneficiary designation. Specifically, if a Florida resident designated the ex-spouse as the beneficiary of a non-probate asset covered by the Revocation Statute after the divorce decree, the Revocation Statute will not apply to invalidate the designation. §732.703(4) (b). Effective July 1, 2021, Florida residents may also, post-divorce, designate in their wills or revocable trusts that an ex-spouse will be an irrevocable beneficiary of an asset. §732.703(4)(c). To fall within these exceptions to the Revocation Statute, the decedent must actively affirm the ex-spouse designation post divorce. A Florida resident may also include language in a revocable trust that overrides the Revocation Statute. §732.703(4)(c). However, a Florida resident cannot use the Revocation Statute to avoid his or her obligations to an ex-spouse. If a divorce decree specifically requires that the asset be maintained for the benefit of a former spouse or children of the marriage, the Revocation Statute recognizes this as an exception, provided other assets of the decedent filling the requirement do not exist at the time of decedent’s death. §732.703(4) (d). A Florida resident cannot rely on the Revocation Statute to revoke the designation of an ex-spouse if the designation unilaterally cannot be modified or is irrevocable. §732.703(4)(e) and (f). Surprisingly, joint accounts are not covered by the Revocation Statute either. §732.703(4)(h). That means an ex-spouse who remains on a joint account post divorce will retain joint ownership of the account. The question remains as to whether others who would be beneficiaries of the decedent spouse may pursue those funds from the ex-spouse/joint account holder based on a divorce decree, as is permitted with funds disbursed from ERISA plans. While section 732.703 is designed to keep banks and insurance companies out of the line of fire in family disputes over beneficiary-designations on non-probate assets, there are some non-probate assets that require financial institutions to follow specific guidelines before deeming an ex-spouse beneficiary designation revoked. The Revocation Statute identifies specific assets in section 732.703(3)(d), (e) and (f) for which the payor has no liability for paying out the decedent’s interest in the asset to any designated beneficiary. Those include POD accounts, a security or other account registered in a transfer-on-death form, and a life insurance policy, annuity or other similar contract that is not held within an employee benefit plan or a tax-qualified retirement account such as an IRA. For the assets listed in section 732.703(3)(a), (b) and (c), identifying the appropriate beneficiary Conditions on the Application of Florida’s Revocation Statute

becomes more complicated for the payor. These assets include a life insurance policy, annuity or other similar contract held within an employee benefit plan or a tax-qualified retirement account, an employee benefit plan itself, and an individual retirement account described in sections 408 or 408A of the Internal Revenue Code of 1986 (“Code”), including an individual retirement annuity described in section 408(b) of the Code. For these assets, the payor must examine whether the governing instrument containing the beneficiary designation expressly designates a spouse. If the governing instrument either contains no information about the relationship between decedent and beneficiary or expressly states that the designated beneficiary is not the decedent’s spouse, the payor may make payment to the named beneficiary. If there is an explicit spousal designation in the governing document, then the payor must review the death certificate and do one of four things. If the death certificate confirms that the decedent and designated spouse were married when decedent died, the payor may distribute to the spouse. If the death certificate states that the decedent was not married or was married to a person other than the designated spouse, the payor may make the distribution to the secondary beneficiary. If the death certificate is silent as to the decedent’s marital status at the time of death, the payor may make payment to the primary beneficiary upon receipt of an affidavit from the primary beneficiary confirming that he or she was married to the decedent at the time of death, or pay the secondary beneficiary upon receipt of an affidavit from the secondary beneficiary that confirms the decedent was not legally married to the primary beneficiary on the date of his or her death. Conclusion Much of today’s wealth is passing through non probate assets and many marriages end in divorce. It is thus critically important that Florida residents review their beneficiary designations regularly because the Revocation Statute, while it affirms significant protection, will not always invalidate an unintended gift to an ex-spouse. It is equally important that payors recognize that, while the Revocation Statute provides them with some protection from being dragged into beneficiary designation disputes, the protection is limited — it comes with some arduous conditions that you should carefully consider with your counsel before making a distribution relying on the Revocation Statute. Kelly O’Keefe is a shareholder in Stearns Weaver Miller’s Tallahassee office. She represents professional and family member fiduciaries in complex and high stakes estate, probate and trust disputes and litigation. O’Keefe is the chair of the Tallahassee Regional Estate Planning Council, and a subcommittee chair for the Florida Probate Rules Committee. She is regularly recognized by The Best Lawyers in America, Florida Trend and Super Lawyers magazines and is AV Preeminent Rated by Martindale-Hubbell. You can reach her at kokeefe@stearnsweaver.com.

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