Is Your Divorce Final? Don’t Forget to Update Your Beneficiaries

If you’re uncertain of the answer, you must confirm your beneficiary status immediately.

More than likely, while you were married, your beneficiary was your spouse. A significant part of financial housekeeping after a divorce involves reviewing your named beneficiaries on 401(k)s, 403(b)s, IRAs, ROTH IRAs, life insurance through your employer or on individual policies, transfer or payable on death registrations, brokerage accounts, and any other type of instrument on which a named beneficiary is designated. However, it is important to keep any beneficiaries until the divorce is finalized and to adhere to the terms of the divorce decree.

You may even believe that you do not need to check on these accounts because you recently updated your will, BUT your beneficiary designations supersede what is specified in your will. Even if you have updated your will to reflect different wishes, your ex-spouse could still inherit certain assets unless you change the beneficiary designations.

Some divorce judgments include a provision to terminate a spouse’s interest; however, some insurers and ERISA plans are not required to follow the judgment. This discrepancy could result in your children or your intended beneficiary needing to appear in court to dispute assets that you never intended to go directly to your ex-spouse. It is critical to rename all beneficiaries once your divorce is finalized.

Protecting your assets and ensuring they go to the right people after your death is crucial. Neglecting to update beneficiary designations after a divorce can have severe financial consequences. Because your will does not supersede beneficiary designations, you must review and update these for all your accounts.

Remember, every situation is unique, and it’s wise to consult with a legal or financial professional to ensure your wishes are carried out. Review your beneficiary designations and make necessary changes promptly.

This is intended for informational purposes only and does not constitute legal or financial advice. It is recommended to consult with an attorney or financial advisor regarding your specific situation.