Recently Divorced? Review your Beneficiaries.
During a divorce, there are so many details that need addressing that relate to the ins and outs of dissolving a marriage. Unless you would still like to leave your life savings to your ex, this is also a good time to revisit any estate planning that you’ve put in place. Oftentimes, beneficiaries are chosen when a new job is started or during major life events, such as marriage. Divorce is another life event worthy of taking the time to review these decisions.
Have a will? You may feel that your will has you covered. The reality is that beneficiaries attached to life insurance policies or financial accounts will override wishes outlined in a will. If you’ve left everything in your will to your children, but your life insurance policy beneficiary still lists your ex-wife, then your ex-wife is the one who gets the life insurance payout. It’s very easy to update beneficiaries on accounts that you own. Check with your financial institution or insurance agent to learn how to make this happen.
What is the best way to determine a beneficiary? When thinking about your beneficiaries, ask yourself the big questions about the future without you. For example, will your children need money to pay for college? Will your parents need help to pay medical bills? Did you consider children or grandchildren? Do you have a favorite charity?
Depending on these answers will help to direct how you should approach your beneficiaries. A direct beneficiary is the cleanest way to insure that your money goes to the person that you’ve identified, but if that person is a minor, do you really want that young adult to receive a lump sum of your life savings? Perhaps a trust is a more conservative option. These are decisions that you can make to insure that your estate is managed properly.
If you have retirement savings, investments, bank accounts or life insurance policies, then you’ve probably assigned a beneficiary to one of these at some point along the way. Your lawyer can help to identify which accounts need attention to update your estate plan appropriately following a divorce. Contact an experienced lawyer to discuss details that relate to your individual divorce situation.