Married couples typically name their spouse as the beneficiary on their company 401(k) plan, individual retirement plans, annuities, life insurance policies and other accounts with designated beneficiaries. It’s important to keep in mind that a divorce does not automatically change all your designated beneficiaries. The best way to avoid potential problems in the future is to make a note to update your beneficiaries after your divorce is final.
There is so much going on during a divorce that one of the easiest mistakes to make is to forget to update the beneficiary information on all accounts. The result of which is often realized too late, when years later a family member is told that your ex-spouse will receive all assets from a retirement or pension account.
In the case of a life insurance policy, remember that the divorce judgment itself does not automatically cancel a spouse’s right as the beneficiary. To remove the ex-spouse as the beneficiary, the insurance company may require the spouse’s consent or a clearly worded divorce judgment stating who owns the insurance policy, who shall be the beneficiary, or who has the right to designate the beneficiary.
If you are currently in divorce proceedings, you have to wait until the divorce is final to make changes. However, immediately after the divorce is final you are free to make changes and it is in your best interest to make those changes sooner rather than later.
If you are unsure whether or not you want to update your beneficiary designation, you should set a reminder in your calendar for one year later to remind you to revisit the issue and make changes if you need to.
Contact Brett Thorsteinson, your trusted divorce and family law attorney to help you with your divorce. Brett listens to your needs and works diligently to protect your interests.