As Forbes magazine asked: What should you change? In two words, almost everything.Once your divorce is final – meaning a final judgment is entered – you should review and revise, if necessary, the following legal and estate planning documents:
Powers of Attorney (property, healthcare, HIPAA, etc)
Life insurance policies
Retirement accountsWhat can happen if you don’t? One example is common. If your ex-spouse remains the beneficiary of your life insurance policy and you pass away, the proceeds will go to your ex-spouse instead your children. That may be what you intend, but probably not. The opposite can also be true. In Florida, the plain language of the documents controls. To the extent your or your former spouse claimed a right to remain as the beneficiary under a life insurance policy – as a condition of the dissolution of marriage – your rights can be waived. In one Florida Supreme Court case, a life insurer sued to determine whether a former wife or the former husband’s sister was entitled to proceeds of his life insurance policy. The Florida Supreme Court held that the former wife of the insured remained primary beneficiary on his life insurance policy. Also, consider your retirement accounts. After a divorce, you may revise your Will to reflect your desire that your 401(k) goes to your children, but if your wife remains the beneficiary of the plan, she will receive those funds. Retirement plan designations can trump estate plan stipulations. The same is true for life insurance; proceeds will go to the named beneficiaries of those policies and not to persons named in a Will or other estate plan document. A divorce judgment is legally binding. If, as a part of your divorce, you agreed that your ex-spouse would remain the beneficiary of a life insurance policy, don’t change the beneficiary designation on the policy itself. But, if that was not your intention, and the agreement is clear, unless you implement your marital settlement agreement, you could be in for a surprise. The Forbes magazine article is here.