You would think that all the legal complications and contortions are behind you once the divorce is finalized, but that’s not always the case, as Michaela explains. Even as a savvy financial journalist with years of experience, she was still taken aback by the lengthy and convoluted procedures to settle her ex’s estate.
What’s at issue are beneficiary designations – on insurance policies, retirement accounts, or other asset accounts.
In many states (including Florida), any beneficiary designation naming an ex-spouse, and executed before the divorce, is automatically revoked as a result of the divorce. (The same may be true for appointments and transfers of property contained in a Will or Trust, so consult your attorney).
It makes sense. You may not want your IRA account or old life insurance policy going to your ex-husband just because you forgot to change the form after the divorce (especially if you now have a new husband!).
But in other cases – for example, when you want your ex to watch over money for a minor child – you may be perfectly content to have them inherit assets or serve as your Executor. That may not happen if all your old designations are automatically “revoked” by state law.
Let Michaela’s story serve as a valuable heads-up. When you divorce, there’s more to do than just dividing up assets. Each party needs to update their own estate planning documents and review those all important beneficiary forms. You’ll want to talk to your attorney about how your state law applies, as state laws differ.
Why is this so important? It’s easy (and usually free) to change beneficiary designations and other legal dispositions now. But what you don’t know can hurt you, and if you wait, it may simply be too late, as Michaela’s story shows.