You’re getting divorced, and so you’re updating your will. You want to make sure that none of your assets go to your ex, but that they instead go to your children.
This is a good first step, but remember that your will is not all that dictates what is done with your money. Many documents have beneficiary designations, and these also need to be updated. Connected accounts and assets could include:
- A 401(k) retirement account.
- Brokerage accounts known as transfer-on-death (TOD) accounts.
- Life insurance that is provided by your employer.
- Additional life insurance policies that you purchased yourself.
- Pay-on-death (POD) bank accounts.
These are just a few examples, but they’re a great place to begin.
What happens if there is a conflict? Say, for example, that your life insurance beneficiary is your ex spouse. Your will says that the money goes to your children. Who really gets it as your estate is distributed?
In many cases, the insurance policy still goes to your spouse. The company is technically responsible for paying the money as directed on their end, no matter what your will says. They’ll just follow those directions. Your children may feel like it’s obvious that you just forgot to change it and that you don’t want the money to go to your ex, but the insurance company often doesn’t care. It’s not there to figure out what you would have wanted, but just to pay out the policy as the paperwork indicates.
Be sure you know all of the legal steps to take when getting divorced. There may be far more critical steps than you realize.
Source: Forbes, “6 Key Money Matters After You Divorce,” Leslie Thompson, accessed Nov. 17, 2017