Changing Beneficiary Designations for Life Insurance and Retirement Benefits after a Divorce
Dear Family Lawyer: "My divorce was finalized last year after a long and bitter court battle. A friend of mine recently told me that I need to change the beneficiary designations on my life insurance and retirement policies in order to make sure that my former spouse doesn’t get any of my benefits when I die. Is this true? I thought the settlement agreement from my divorce proceeding gave me all of these assets? – Matt in Edina, Minnesota.
Family Lawyer: Maybe yes. Maybe no. I think your friend is offering you some pretty good free advice. I would do what he suggests. It's always better to be safe than sorry. A few years ago, the Minnesota legislature passed a law which revoked all life insurance and retirement beneficiary designations in favor of a former spouse after a divorce is finalized. However, a few years later, the law was declared unconstitutional (in a number of contexts) because it was held to infringe upon an individual’s right to contract with the insurance company. The current state of the law is unclear. While the language in your settlement agreement might be sufficient to grant you all ownership rights or interests in the policy, it might not be. There is no way to know for certain. The only sure way to protect your assets is to change your beneficiary designation. It is simple, easy, and free.
Family Lawyer: Maybe yes. Maybe no. I think your friend is offering you some pretty good free advice. I would do what he suggests. It's always better to be safe than sorry. A few years ago, the Minnesota legislature passed a law which revoked all life insurance and retirement beneficiary designations in favor of a former spouse after a divorce is finalized. However, a few years later, the law was declared unconstitutional (in a number of contexts) because it was held to infringe upon an individual’s right to contract with the insurance company. The current state of the law is unclear. While the language in your settlement agreement might be sufficient to grant you all ownership rights or interests in the policy, it might not be. There is no way to know for certain. The only sure way to protect your assets is to change your beneficiary designation. It is simple, easy, and free.
To newly single: The Ins. Co. will look at your beneficiary form to determine who gets the $. Make sure the form is changed to reflect your current wishes. If you have minor children, be sure you have a will with a contingent trust for the kids to avoid a lot of hassle and money for your survivors.
Reply to this