Divorce lawyers know that the process of getting a divorce can be time-consuming and involve making many personal changes.
From legally updating your name and marital status to working out child custody orders, there are many details you must deal with for your divorce to be complete.
One such detail that many divorce attorneys find frequently overlooked when couples divorce is the changing of each spouse's inheritance beneficiaries.
It’s an important step to remember to make sure your assets go to the right beneficiaries when you pass on, especially for Texas residents.
Who Is Your Beneficiary?
Whether it’s your retirement fund, life insurance, asset accounts, or any other financial account that requires you to name a beneficiary to inherit your wealth after you pass on, do you actually know who your chosen beneficiaries are right now?
As divorce attorneys, we find that many of our clients don’t remember who they named as beneficiary. If they forget to reassign their beneficiaries, they can inadvertently leave their assets to a former spouse even if their will passes those assets to a different beneficiary.
If you are getting divorced, it’s essential to review all your financial accounts and change your beneficiaries so your assets pass down the way you expect them to.
Beneficiary Law Conflicts After Texas Divorces
Because you live in Texas, as divorce lawyers we alert our clients who live in Texas that there is even more reason to be punctual about changing the beneficiary on their various accounts as two conflicting laws could come into play.
According to Texas family court law, if your beneficiaries are not changed on your accounts, the state will still recognize your ex-spouse as the beneficiary but treat it as if they passed on before you did and release your assets to the next assigned beneficiary in line.
Where the conflict arises is that for some accounts, specifically life insurance and retirement benefits gained through an employer, Texas law is overridden by the federal law known as the Employee Retirement Income Security Act (ERISA).
ERISA requires married employees to choose their spouse as a beneficiary unless the spouse signs a waiver releasing those benefits.
Unless you have changed your beneficiary once you are no longer married, ERISA will award your assets to your ex-spouse regardless of what Texas family law or your other estate documents say.
Changing Beneficiaries Is Easy to Do
Fortunately, changing beneficiaries on the necessary accounts is very easy to do and something that divorce attorneys can help you with if necessary.
The best time to do it is right after you have come to agreement on the division of your personal assets during the divorce proceedings.
Usually it only requires logging into your various financial accounts online and finding the beneficiaries section of the website where you can make those changes.
You could also call your various financial institutions so they can help you do it.
Keep Control of Your Assets by Changing Your Beneficiary
If you’re getting divorced, there are many details you must take care of with your divorce lawyer to be able to finalize the dissolution of your marriage.
While changing your beneficiaries is not a required step, doing so during your divorce planning is the best way to get it done without forgetting about it.
Your divorce attorney can help you identify which accounts should be reviewed and the beneficiary changed so you can be sure your assets will go to the right individuals when you pass on.