After a party completes their divorce, there are often many things that they need to do to finalize matters. However, one item that many overlook is changing their beneficiary designations after divorce to remove their ex-spouse.
What Kind of Assets Have Beneficiary Designations?
Many different kinds of assets can have beneficiary designations on them. Sometimes, these are referred to as transfers on death or payable on death designations. Generally, these can be referred to as the acronyms of TOD’s are POD’s.
With beneficiary designations, POD’s or TOD’s, the idea is that these assets pass at death outside the probate court. When assets go into probate, the time it can take for these assets to be distributed can be lengthy. Going through the probate court can also result in lawyers’ fees and lots of red tape.
However, before divorce, most individuals name their spouse as the beneficiary or the TOD or POD beneficiary, if the assets are not jointly titled in the first place. The idea is that the assets will go to the spouse upon death.
In the case of a second or third marriage, that is not always the case. Often, in these instances, the beneficiaries are children from a prior marriage.
Nonetheless, after a divorce, a party must look at their beneficiary designations, including their TOD’s and POD’s. Unfortunately, amid everything going on during a divorce, many parties forget to make this change.
In many instances, the beneficiary designation can be changed to the children or a trust set up for the minor children if they are still minors. In other cases, it might be a family member or new significant other.
What Assets Often Have Beneficiary Designations?
Many different kinds of assets can have beneficiary designations or TOD’s or POD’s, including:
1.) Life Insurance;
2.) Retirement accounts;
3.) Investment accounts;
4.) Stocks and bonds; and
4.) Bank accounts.
Thus, it is often advisable for anybody to get with an estate planning attorney to discuss the matter after a divorce. In addition, speaking to whoever does their investing and banking is often wise. Working hand-in-hand, an estate planning attorney, investment representative, and banker can frequently clean up all the beneficiary designations.
What If Somebody Does Not Change Their Beneficiary Designations?
If a party does not change their beneficiary designations, the assets will go to whoever was the beneficiary before the divorce. Unfortunately, in far too many cases, that will be the ex-spouse.
The assets will pass through the probate court if no beneficiaries are listed. But, again, this is not what most parties want with the red tape, attorneys’ fees, and prolonged process.
If you have completed a divorce and need to change your beneficiary designations, Stange Law Firm, PC can help. You can call our estate planning lawyers at 855-805-0595 or contact us online.