If you have just gotten divorced, you may be focused on
getting on with your life. But make sure you also have updated the financial
arrangements that kick in at your death. Failure to do so—or to alert all
relevant parties to the changes—could result in certain assets and benefits
unintentionally going to your former spouse or his or her family upon your
Divorcing couples who previously used an estate planner
together should individually seek out new advisers to avoid any conflicts of
interest. Other pointers:
Name new proxies. There
are a number of other documents that can easily be revoked before a divorce,
lawyers say, including financial powers of attorney, health-care proxies and
even something in New York state called an appointment of agent, which
designates a person to take care of disposing of your remains after your death.
Changing these documents requires tearing up the old ones
and filling out new ones naming other people in those roles. The new documents
should start out saying they revoke and replace the older documents.
beneficiaries. Beneficiary designations should be reviewed and
changed. Many people have multiple bank and brokerage accounts, insurance
policies, retirement accounts and annuities that name beneficiaries or
individuals to whom ownership will transfer at death. It isn’t uncommon for
some of these accounts and policies to be overlooked or long-forgotten.
The proceeds of these accounts and policies pass directly to
the named individuals regardless of what a will says. The money could be long
gone by the time family members find out about it.
Beneficiaries have to be changed in writing by filling out a
new form and sending it to the financial institution handling the account or
Lawyers advise people to make a careful inventory of their
records so they don’t accidentally miss an account.
When ties do bind. In
some divorces, the financial agreements call for an ex-spouse to remain a
beneficiary of a retirement account or insurance policy—and that beneficiary
may want to take steps to clarify the arrangements.
The decision can be reinforced by filling out new
beneficiary paperwork after the divorce to make the intention clear, lawyers
say. Get a written confirmation from an insurance company that they have
received your beneficiary changes, lawyers advise.
Individual-retirement-account money can be divided and
rolled over into separate accounts by sending a letter to the plan
administrator with proof of the divorce, Ms. Schmidt says. Qualified retirement
plans, however, such as company-sponsored ones, take a little more planning.
The ex-spouse should get a court order called a Qualified
Domestic Relations Order that gives him or her the right to a portion of the
other’s 401(k) or other qualified-plan assets, as set out in their divorce
here to access the full article on The Wall Street Journal.