With the number of divorces increasing, more people are concerned about leaving money to the wrong person.
Whatever the reasons for your divorce, chances are you do not want your ex to get your money after you die.
What you may not know is your will alone may not accomplish this.
If you signed up for a life insurance policy or insurance plan while you were married, you likely named your ex as the beneficiary.
According to an ABC 15 Arizona post, titled “Beneficiary designation: Don't set it and forget it or your ex could end up with your life savings,” the Employee Retirement Income Security Act (ERISA) legally requires plan administrators to give the money to the beneficiary named on the form.
The beneficiary trumps the will.
Unfortunately, when you die, it is too late to fix.
Review and update the beneficiary designations on all of your plans and account.
If you plan for your minor child to be the beneficiary, do not name him or her directly. Instead, arrange for the child to inherit through a trust.
Designate contingent beneficiaries in case your first choice dies before he or she can inherit.
Note: if you are married, your spouse must be the beneficiary for your 401(k).
If you fail to redirect your ex-spouse as the beneficiary of your 401(k), then they will inherit the proceeds ... despite any state law to the contrary!
Visit your estate planning attorney to update your will.
Since you are divorced, consider using a trust to leave money to your minor children and protect your assets from your ex.
Without an up-to-date estate plan, you will be leaving your loved ones with both headaches and heartaches.
Love may be a battlefield, but your estate plan should not be one as well.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: ABC 15 Arizona (July 17, 2016) “Beneficiary designation: Don't set it and forget it or your ex could end up with your life savings”