Why Beneficiary Designations Should be Updated After Divorce


While in the process of divorcing, your attorney will remind you that you cannot change beneficiary designations on your accounts until the divorce is finalized.  It is not uncommon to want to put the divorce out of your mind, especially if your divorce has lasted a long time. However, while you may want to not think about it, remember that you need to change your beneficiary designations immediately.

The divorce decree does not automatically change the beneficiary designations of your life insurance, retirement assets, or bank accounts. That responsibility is yours!  Any account that   has a designation such as insurance policies, retirement plans, health savings accounts, brokerage accounts and bank accounts, may have named beneficiary designations. While you were married, it is highly likely that the beneficiary was your spouse.

Post-divorce if something catastrophic happened to you and the beneficiary designation wasn’t changed, your ex-spouse could receive life insurance proceeds or your retirement account balance. As soon as the ink is dry on your divorce decree, contact your insurance companies, the administrator of your retirement assets, and the bank or brokerage firm that holds your bank and brokerage accounts, and request a change of beneficiary form.  If a life insurance policy or retirement funds are managed through work, contact your HR department.  Fill that form out immediately. You can designate any beneficiary of your choosing (unless the divorce decree mandates a specific beneficiary).  Return the forms and follow-up to ensure that each company received your change of beneficiary form and has made the requested change. While some companies provide on-line access to change beneficiaries they may also require a hard paper copy of your beneficiary designation to have it be effective.

Frequently, people remarry after divorce. One of the former spouses passes away and the beneficiary designation of the life insurance or retirement account was not changed to name the new spouse as beneficiary.   The new spouse may be required to get involved in litigation against the former spouse to attempt to obtain the life insurance proceeds or retirement account funds.

Another example is a joint bank account that was held in both of the former spouse’s names.  Following divorce, one ex-spouse continues to use that joint bank account. The beneficiary designation on the account is unchanged.  One of the ex-spouses passes away. The funds in that former joint bank account could be claimed by the other joint bank account holder.  Instead of changing the beneficiary designation, the joint bank account could be closed and a new account opened.  If the new account is a sole owner account, a beneficiary should be designated.

Divorce isn’t the only triggering event that should cause you to reexamine your beneficiary designations. Reviewing beneficiary designations should be completed regularly throughout your lifetime. If you have questions about beneficiary designations, how to change them, or when to change them, seek legal counsel or contact the company holding your asset.

About the Author: Carissa Seidl is a family law attorney at the Phoenix law firm of Jaburg Wilk.  Her representation of family law clients focuses on divorce, child custody and post-decree modifications. She is experienced in high conflict dissolutions and can be reached at 602.248.1000.

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