People who are going through a divorce in New York often have a host of paperwork to manage, but one thing that is sometimes forgotten is a change in beneficiary designations on life insurance policies, retirement accounts, and other investment vehicles. In many instances, estranged spouses will be listed as the primary beneficiary, and if this designation is not changed, they will remain so.
Beneficiary designations cannot be changed once divorce proceedings have begun. A person has to make the changes either before the divorce is filed or after it is finalized. Doing so in advance of the divorce is possible, but in the case of retirement accounts that are subject to the provisions of ERISA, changing beneficiaries requires the consent of the other spouse. It is also important to know that changing one’s will to disinherit a spouse will not supersede beneficiary designations in most cases.
Without changing beneficiary designations, a former spouse could stand to inherit many of the assets that the owner had intended to be distributed to children or other family members. Some states have passed laws to try to address this problem, allowing the marital status of the deceased to be taken into account with life insurance proceeds. However, the bottom line is for estranged spouses to avoid the potential for misdirection of their assets and to change their beneficiary designations as soon as possible after the divorce is finalized.
Ending a marriage can often be a stressful process, especially when one or both spouses has significant assets. An experienced attorney may be helpful to a client who is attempting to ensure that his or her property will be handled in an effective manner once the divorce has been finalized.