AALU: Change Life Insurance Beneficiaries Post-Divorce
Forget Something? Make Sure to Change Life Insurance Beneficiaries Post-Divorce.
It is very commonplace for life insurance beneficiary designations to be overlooked or even forgotten. Proper legacy management requires updating life insurance beneficiary designations following divorce.
Typically, after divorce, individuals no longer want their former spouses to receive life insurance death benefits. In many cases, the terms of the policy and/or applicable state laws will automatically revoke the designation of a former spouse as a life insurance beneficiary, but this is not always the case.
Further, the divorce decree may require that a former spouse or children from the marriage be named as beneficiaries of an individual’s life insurance policy. Accordingly, reviewing and updating beneficiary designations post-divorce is critical to ensure payment of policy proceeds to the required or desired beneficiaries.
Potentially conflicting state and federal laws impact how a beneficiary designation in favor of a former spouse will be treated following a divorce. Best practices dictate filing new beneficiary designations for all policies either before filing for divorce or immediately after the divorce is finalized. Failure to update beneficiary designations after a divorce can result in disruption of the insured’s legacy plan.