There are many suggested steps to take after a divorce to ensure your new life goes smoothly. These steps include changing a last name back to a maiden name (optional), opening new bank accounts or finding a new place to live. Other items include reviewing various accounts to ensure who the beneficiaries are and ensuring that they are updated. Those accounts include:
- IRAs and other retirement accounts
- Life insurance policies
- Bank accounts
Failing to change the beneficiary designation on these types of assets can lead to confusion in the distribution of the asset and could lead to expensive litigation in the event of death.
Can an ex really claim assets from your estate?
The answer is NO. However, many assets fall outside the estate such as life insurance.
In June 2018, the U.S. Supreme Court ruled on a case concerning just such a situation. A man had purchased a life insurance policy, designated his then-wife as the beneficiary and then did not change the designation after their divorce. After his death, the ex-wife claimed the asset, while his children from another relationship contested it.
The case went to the Supreme Court, where the justices ruled (8-1) that a judgment of divorce automatically revokes the beneficiary’s right to a life insurance policy. The justices also noted that such a revocation might apply to “similar assets.”
Unfortunately for the man’s children, the high court came to this decision after lengthy, expensive litigation. It is not a foregone conclusion that an ex-spouse will not receive any assets outside the estate.
Make sure your assets are distributed properly
Checking who is named as the beneficiary on insurance policies, retirement and bank accounts and real estate titles/deeds will ensure that the parties’ assets are being distributed the way they want. Having a Will will assist in making sure that your assets are distributed in accord with your wishes. This proactive –but often overlooked–step following a divorce can help ensure that loved ones are able to live happily ever after.