Have you updated your beneficiary designations following divorce?

Have you updated your beneficiary designations following divorce?

Most people going through a divorce have a lot of issues that they have to tackle. Undoubtedly, the process can be emotionally taxing. Post-divorce, many people are simply easing into their now single life, adjusting slowly yet steadily and hoping that their ex-spouse and they can move on. However, in the hurry to get the divorce over with and forget the past many times people overlook the important issue of updating beneficiary designations on life insurance policies, financial accounts, retirement accounts and wills. The consequences of not updating beneficiary designations and leaving an ex-spouse as a beneficiary can have unintended repercussions.

Michigan residents may find it interesting to learn that a recent court case on this very issue made headlines. In this case, a woman who passed away five years ago executed a will in the mid-1990’s wherein she named her husband at the time as a primary beneficiary to inherit her property in the event of her death. Additionally, she named her then husband’s father as a secondary beneficiary. The woman and her husband divorced in 2007. However, the woman did not update her will or update her beneficiary designations.

Following her death in 2010, even though her ex-husband was cut out of her will, the will did not cut out her ex-father-in-law who was named a secondary beneficiary in her 1996 will. Even though the woman’s family argued that the woman updated her will they could not produce it as evidence. As a result, the court upheld the 1996 will and the woman’s property, which included a home that was in her family for generations, passed on to her ex-father-in-law.

Going through a divorce can be tough, and post-divorce many people just want to open a new chapter in their life. In addition to the typical issues of property division, child custody and child support, it is very important to take the time to update beneficiary designations in wills and other financial documents.

Source: The Wall Street Journal, “After Divorce, Separate Your Estate Plans Too,” Liz Moyer, Feb. 20, 2015

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