After divorce there is a laundry list of tasks that an individual should complete to tie up loose ends (for example, closing joint bank accounts, credit cards, etc). While finalizing their affairs, individuals frequently neglect to change their life insurance beneficiary designations. Assuming an individual has no obligation to maintain life insurance for the benefit of their former spouse (whether under the parties’ agreement or pursuant to the Court’s judgment), it is likely that they will want to name an alternative individual(s) as beneficiary(ies) of their life insurance policy(s). Failing to change your life insurance beneficiary designation can be extremely detrimental in the long run.
The beneficiary designation as provided for in the policy will trump the terms of the parties’ separation agreement concerning life insurance. In essence, if an individual fails to change their beneficiary designation (despite the separation agreement saying they had no obligation to provide the former spouse with insurance), the former spouse will be entitled to receive the proceeds of the life insurance policy.
Make sure your last gift is delivered as intended. If you need assistance in reviewing the policy, contact your life insurance agent or an attorney.
For further information on changing life insurance beneficiary designations and divorce, in general, please contact Patricia S. Fernandez & Associates to learn more about the process. Pat and her team can help you answer your questions.