When experiencing the challenges of a divorce, it can be difficult to focus
on many practical implications you will need to consider. One important
issue that is often forgotten is the updating of key documents and policies
to reflect your new status. Part of this involves financial housekeeping
and the need to revisit life insurance policies, pensions, retirement
plans, and other legal instruments for which a beneficiary is named.
In many cases, a person will designate their spouse as a beneficiary. In
event of a divorce, they will often wish to change who receives benefits
upon their death. It is important to understand that beneficiaries can
be changed either prior to divorce or after divorce has been finalized,
and that designations cannot be changed while proceedings are ongoing.
What to Consider
If you are considering divorce, going through divorce proceedings, or have
finalized your separation, there are a few important points to consider
as you get your finances and key documents in order. These points include:
Know what needs to changed, and when
Account for any and all instruments for which you have named your spouse
as a beneficiary. Commonly, these include (but are not limited to):
- Life insurance policies
- Retirement accounts
- And other types of accounts or plans, such as checking/savings, mutual
funds, CDs, etc.
Once you are aware of the documents in which you’ve named a beneficiary,
you can determine if you wish to change them.
You should discuss these accounts and policies with your divorce attorney
if your divorce is not yet final. While you may be allowed (and even recommended)
to change some beneficiary designations prior to finalizing the divorce,
you may have to wait until after for others.
It is also a good idea to keep records of beneficiary designations you’ve
changed, and when, as part of your divorce files.
Changing your will is NOT enough
Revising your will to disinherit an ex-spouse is not enough to exclude
them from inheriting certain benefits. This is because
beneficiary designations supersede what is specified in your will. You must designate a new beneficiary for each plan or policy where they
Know the laws involved
Under Washington law (RCW 11.07.010(2)(a)), the state will automatically
revoke the designation of former spouses or domestic partners as beneficiaries
to life insurance policies if the insured failed to designate a new beneficiary
after divorce or dissolution. The automatic revocation statute presumes
that a divorce inherently means you do not want an ex-spouse to be named
as a beneficiary. There are exceptions, however, such as if a divorce
decree requires ex-spouses to be maintained as beneficiaries, or if the
redesignated as the beneficiary, among others. Because of this law, failing to change
a beneficiary from an ex-spouse to another party can result in the courts
having to determine who receives your benefits.
Cases involving children
Washington law specifies that when divorce decrees require insured parties
to maintain policies as security for their obligation to provide child
support, children will have an equitable interest even if the beneficiary
is changed before support obligations expire. When there are financial
obligations established in a divorce agreement, beneficiaries should be
designated in accordance to those obligations.
Taking the time to update beneficiaries after a divorce is critical in
ensuring your loved ones receive your benefits and to avoid legal complexities
upon your death. As such, you should take into account all plans and explicitly
change beneficiary designations as soon as you are legally able. Because
every case, family, and policy is unique, it is best to seek advice on
any concerns or issues inherent to your situation from experienced counsel.
At McKinley Irvin, our Washington divorce attorneys provide comprehensive
counsel and representation to clients throughout the divorce process.
If you have questions regarding beneficiary designations or any other
divorce-related matters, contact our firm today.