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How a Divorce Can Affect Your Estate Plan, Part 4: Beneficiary Designations

Posted on in Estate Planning

Lombard estate planning attorneysThe American Stress Institute has named divorce as the second-most stressful event a person can endure. Ending a marriage is considered even more stressful than losing your job or going to jail. Of course, the emotional toll that comes with ending a serious relationship is a big part of this stress, but the logistics and paperwork required to properly divorce can sometimes be even more stressful. This is one reason A. Traub & Associates is dedicated to helping clients adjust their estate plans after a divorce. In this final post of a four-part series about how divorce will affect your estate plan, we will discuss updating beneficiaries after a divorce.

Estate Planning Housekeeping for Those Getting Divorced

In the last few posts, we discussed updating wills, trusts, and powers of attorney after a divorce. In addition to these tasks, divorcing individuals should make sure to update documents that designate beneficiaries for things like insurance policies, pensions, and retirement plans. If you are like most people, you probably named your spouse as the primary beneficiary of many policies and accounts. Some individuals assume that when a person divorces, these beneficiary designations automatically change. However, this is not the case. If you are getting a divorce and do not want your soon-to-be-ex-spouse to be a beneficiary anymore, you are responsible for making these changes.

If you are considering divorce, currently undergoing divorce proceedings, or have legally separated from your spouse, there are a few key ideas to consider as you get your finances and documents in order. Firstly, know which documents and policies need to be changed and when. List any legal instruments for which you have named your spouse a beneficiary. These may include retirement accounts, pensions, life insurance policies, annuities, bank accounts, mutual funds, CDs, and more. Once you have determined which documents have your spouse listed as a beneficiary, you can choose which plans to change. Lastly, make sure to keep documentation of the changes in case any issues arise in the future.

Can I Just Change My Will?

Some people mistakenly assume that changing their will is enough to disinherit an ex-spouse. However, because beneficiary designations supersede the dictums of your will, simply changing your will alone will not remove your spouse as a beneficiary from all policies. You must manually name a new beneficiary for each policy, plan, or account you wish to change after a divorce.

If this sounds too overwhelming, do not worry. You do not have to navigate post-divorce estate planning alone. To speak with one of the experienced Lombard estate planning attorneys at A. Traub & Associates, call 630-426-0196 today.

 

Sources:

https://www.thebalance.com/estate-planning-documents-to-update-for-divorce-3993981

http://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=2113&ChapterID=60

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