Home » Why Changing Your Beneficiary Designations Post-Divorce is Critical

Jun 8, 2015

Why Changing Your Beneficiary Designations Post-Divorce is Critical


By Jim Kravitz

Lawrence James Financial Group

Life is full of changes. Some are foreseeable while others are totally unexpected. Many of these life-changing events — a death in the family, the birth of a child, forced early retirement or a divorce, can make your normal, every-day life seem like it’s no longer in your control. During these hectic times, it’s easy to overlook some very important changes that you need to make to the beneficiary designations on your financial accounts, policies and other legal documents.

Review Designated Beneficiary on Every Account

On your Individual Retirement Account (IRA), your annuities, your life insurance policies and some other accounts, such as some pension plans, etc., you have to designate a beneficiary, or multiple beneficiaries, in case there are assets or benefits still left in the account at the time of your death. Assets still remaining in the account will be passed on to the designated beneficiary or beneficiaries.

You should also designate a “contingent beneficiary” (or multiple contingent beneficiaries) in case the primary beneficiary is already deceased prior to your passing. This way, the remaining assets will pass directly to the contingent beneficiary.

Now, in the case of a divorce, UNLESS you want your ex-spouse to inherit your assets at the time of your death, you should change your beneficiary designations as soon as possible after the settlement of the divorce agreement. You can change your beneficiary designations at any time and as many times as you want on your IRA account, annuities and life insurance policy.

Your Will vs. Your Accounts

Also, don’t be misled by thinking that you have taken care of this because “I just re-did my will and took my ex-spouse off as my beneficiary.” Your beneficiary designations on these accounts (IRA’s, annuities, life insurance policies) will supersede the will. What this means is that the beneficiaries designated on those accounts will receive the assets no matter what the will states. So be sure to change the beneficiary designations directly with the bank, brokerage firm, investment advisor, insurance company, etc. who hold the assets or insurance policy.

Jim Kravitz is a Registered Representative of MerCap Securities, LLC and an Investment Adviser Representative of Merion Wealth Partners, LLC. For more information, click here to see Jim’s listing in the Alpha Resource Center directory

©2015 Alpha Center for Divorce Mediation