Changing Beneficiaries After a Divorce

If you're filing for divorce, estate planning is probably the last thing on your mind. However, once your divorce is finalized, you need to update your estate planning documents. If you don't, some of your assets could be distributed in ways that you don't want, and go straight to your ex-spouse.

If you're like many people, a large portion of your assets are controlled by beneficiary designations, which is why it's critically important to ensure that they are updated immediately following your divorce.

Revoke Your Old Will

To begin, revoke your old will (tearing it up is the best method) and create a new one. If you don't have a will, now is an excellent time to make one. If you had a living trust during your marriage, you'll want to do the same.

A will allows you to:

  • Name an executor to settle your estate when you pass away.
  • Leave your property to whom you want, when you want.
  • Name a guardian for minor children if one is ever needed.

Each of these issues may be affected by a divorce, so examine them carefully.

Update Your Beneficiary Designations

As important as your will is, a lot of your assets may pass outside of a will; be sure to update all beneficiary designations for:

  • Life insurance policies
  • Bank accounts
  • Retirement accounts, such as 401(k)s and IRAs
  • Brokerage accounts with transfer-on-death designations

If you wish to name a new person as a beneficiary on any of these accounts, request new documents from your employer, bank, or brokerage company, fill them out and submit them as soon as possible.

Don't assume that your divorce decree or state law will revoke any earlier beneficiary designations that name your former spouse. In many cases, pensions, life insurance policies and retirement accounts are governed by the federal law known as ERISA. Under ERISA guidelines, unless you change the paperwork, your former spouse would be the one to inherit.

Contact an estate planning lawyer to assist you with updating your beneficiary designations!