Changing Beneficiary Designations After Divorce

In many cases, a person will designate their spouse as a beneficiary. In event of a divorce, they will often wish to change who receives benefits upon their death. It is important to understand that beneficiaries can be changed either prior to divorce or after divorce has been finalized, and that designations cannot be changed while proceedings are ongoing.

What to Consider

If you are considering divorce, going through divorce proceedings, or have finalized your separation, there are a few important points to consider as you get your finances and key documents in order. These points include:

Know what needs to changed, and when

Account for any and all instruments for which you have named your spouse as a beneficiary. Commonly, these include (but are not limited to):

• Life insurance policies
• Retirement accounts
• Pensions
• Annuities
• And other types of accounts or plans, such as checking/savings, mutual funds, CDs, etc.

Once you are aware of the documents in which you’ve named a beneficiary, you can determine if you wish to change them.

You should discuss these accounts and policies with your divorce attorney if your divorce is not yet final. While you may be allowed (and even recommended) to change some beneficiary designations prior to finalizing the divorce, you may have to wait until after for others.

It is also a good idea to keep records of beneficiary designations you’ve changed, and when, as part of your divorce files.

Changing your will is NOT enough

Revising your will to disinherit an ex-spouse is not enough to exclude them from inheriting certain benefits. This is because beneficiary designations supersede what is specified in your will. You must designate a new beneficiary for each plan or policy where they are named.

Know the laws involved

Under Washington law (RCW 11.07.010(2)(a)), the state will automatically revoke the designation of former spouses or domestic partners as beneficiaries to life insurance policies if the insured failed to designate a new beneficiary after divorce or dissolution. The automatic revocation statute presumes that a divorce inherently means you do not want an ex-spouse to be named as a beneficiary. There are exceptions, however, such as if a divorce decree requires ex-spouses to be maintained as beneficiaries, or if the ex-spouse is redesignated as the beneficiary, among others. Because of this law, failing to change a beneficiary from an ex-spouse to another party can result in the courts having to determine who receives your benefits.

Cases involving children

Washington law specifies that when divorce decrees require insured parties to maintain policies as security for their obligation to provide child support, children will have an equitable interest even if the beneficiary is changed before support obligations expire. When there are financial obligations established in a divorce agreement, beneficiaries should be designated in accordance to those obligations.

Taking the time to update beneficiaries after a divorce is critical in ensuring your loved ones receive your benefits and to avoid legal complexities upon your death. As such, you should take into account all plans and explicitly change beneficiary designations as soon as you are legally able. Because every case, family, and policy is unique, it is best to seek advice on any concerns or issues inherent to your situation from experienced counsel.