First of all, couples should waste no time in naming new proxies, including health care proxies and powers of attorney. This ensures that one’s end of life decisions will be carried out by someone who has that person’s best interests in mind, rather than one’s ex-spouse.
In addition, after a divorce each spouse should review who they have designated as beneficiaries on their financial accounts and change these beneficiaries accordingly. Accounts that may have beneficiaries include brokerage accounts, bank accounts, retirement accounts as well as insurance policies and annuities. Upon a person’s death, the funds in these accounts will go directly to the person named as a beneficiary, even if a person’s will states something different. Therefore, it is important for one to review who they have designated as a beneficiary after a divorce so that the funds in these important accounts do not go to one’s ex-spouse.
In some situations, a spouse’s divorce settlement states that their ex-spouse must remain listed as a beneficiary on one’s insurance policy or retirement account. In general, individual retirement accounts can be split into two separate accounts. However, to split a qualified retirement plan such as a 401(k), a spouse may need to ascertain a Qualified Domestic Relations Order from the court as per their divorce decree.
Dealing with estate planning documents after a divorce can be complicated. There may be many steps to take to ensure one’s beneficiaries are successfully changed and that accounts that need to be divided are done so per the law. Therefore, it may be a good idea to seek the help of a professional in such situations, to ensure one’s rights are upheld.