There are a lot of things you need to consider when going through a divorce, but one issue is a detail that a lot of newly single divorcees forget. This potential problem relates to the beneficiary designation on your 401(k), IRA and other insurance and investment accounts.
If you're getting a divorce, it's important to update your beneficiary designation as soon as possible.
Don't wills govern the dispensation of assets?
Maybe you updated your will to say that your children will inherit the entirety of your estate. However, the way you filled out the beneficiary designation form on your financial accounts supersedes anything you codify in your will.
Let's say saved a lot of money in your 401(k) over the years. Maybe you have $600,000 worth of investments. Even after splitting part of it up with your ex-spouse, you're excited to use this extra financial padding to create a financially secure future. Nevertheless, if you die without removing your ex-wife as the designated beneficiary, she'll receive the contents of your 401(k) and the contents of other accounts with her name on them, even if years have passed since your divorce.
Beneficiary designations: A legally binding agreement
Neither a will nor a trust can trump a beneficiary designation on a financial account. It doesn't matter how much your heirs try to litigate the case, they'll be out of luck.
Unfortunately, this situation happens a lot - especially when a newly single individual passes away unexpectedly. There have been many cases where sons and daughters are denied the inheritance that they deserved because of an overlooked beneficiary form.
A divorce lawyer can help you avoid common mistakes
One of the most important roles of a Texas divorce lawyer is to assist spouses in avoiding common missteps during the dissolution of their marriages. Reminding you to update your beneficiary designation on financial accounts is just one of the many things with which an experienced family law attorney can assist you.