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Beneficiary designations and divorce

On Behalf of | Apr 15, 2015 | Firm News

Individuals in Texas who are divorcing may be preoccupied with thoughts of asset division and child custody, but it is also important to make sure that beneficiary designations are changed. This can be done either before filing for divorce or after the divorce is finalized. It is also important to note that changing beneficiary designation is separate from making changes to a will. A will cannot be used to change these designations.

There are some disadvantages to making the changes prior to the divorce if an individual has not yet discussed the desire to divorce with their spouse or if the relationship is already contentious. An individual may need the spouse’s signature on some accounts in order to change the primary beneficiary. Even if that is not necessary, if the two have the same financial planner, the planner may contact the other party about the change. However, if an individual decides to wait until after the divorce to make the changes, it should be done as soon as possible.

Some individuals may wish to keep an former spouse as the beneficiary. For example, they may wish to ensure that the former spouse and child continue to receive support. If this is the case, the individual may wish to fill out new beneficiary forms after the divorce to reinforce the arrangement and reduce the chances that it will be challenged.

Changing beneficiary designations is only one of the complications that may accompany divorce, and individuals may wish to discuss those difficult elements with an attorney. For example, an individual who is divorcing in a second marriage may need to balance child and spousal support obligations from a previous marriage with new obligations. An attorney may be able to assist with negotiations or litigation depending on an individual’s circumstances.