Divorcing? Update Your Beneficiary Designations!
Posted on Apr 7, 2015 9:25am PDT
When people file for divorce, their estate plan and their beneficiary designations are often the last thing on their mind, however, they deserve thoughtful and prompt consideration. If you are like most people, there is a good chance that a lot of your wealth is controlled by beneficiary designations, and you've likely named your spouse as a beneficiary on at least one estate planning document.
Assets with named beneficiaries pass outside of a will. So, if you were to divorce and leave your beneficiary designations untouched, this could lead to unintended consequences. Let's take a look at assets controlled by beneficiary designations:
- IRAs
- Life insurance
- Bank accounts
- Retirement accounts
- Living trusts
It is possible to divorce and forget to update your beneficiary designations, as this is not uncommon and it happens. If you were to get a divorce and die from an injury or a disease, a large portion of your assets could go to your ex-husband or wife, and not your children.
Even if you remarry, if something were to happen to you and you failed to update your beneficiaries, your ex-spouse could receive a share of your assets. While occasionally state law will remove an ex-spouse as a beneficiary in a will, in many cases a court will not allow changes to a beneficiary designation, despite a divorce.
Start with Revoking Your Old Will
One of the best ways to get started is to revoke your old will and write a new one, and this goes for a trust that names your ex-spouse as a beneficiary to any of your assets. Your old will likely names your ex as a beneficiary of a large portion of your property, and that's probably not what you would want today.
To ensure that you make the right changes to the applicable estate planning documents, use our directory to find a divorce lawyer near you!