Married people often name their spouses as beneficiaries in estate planning, financial and insurance documents. Their spouse may be the main beneficiary in a will. They may be the beneficiary of a life insurance payout. They may even receive the remaining balance in a retirement savings account due to transfer-on-death beneficiary designation paperwork submitted to a financial institution.
Divorce largely eliminates financial ties between spouses, as well as the desire to provide continued support, even after death. Can divorced individuals expect state law and court precedent to override outdated beneficiary designations?
Paperwork updates are likely necessary
In some jurisdictions, divorce proceedings lead to a presumption imposed by the law that beneficiary designations naming an ex-spouse are no longer valid. People must renew the beneficiary designation after the divorce if they want their spouse to receive their life insurance policy or a financial account.
Virginia is not one of those states. If someone dies with outdated beneficiary designations on record, their former spouse could receive their life insurance, assume control of their financial account or be the main beneficiary of their estate. In fact, the courts can even mandate that one spouse continue to carry life insurance that means the other is a beneficiary after a divorce occurs.
Outdated beneficiary designations do not automatically become invalid because of a change in marital status. Divorced adults must file new paperwork with their life insurance providers and financial institutions. They also need to update their wills and trusts to remove their former spouses as beneficiaries.
Working with an estate planning attorney can help divorced individuals identify all of the changes and updates they need to make. Prompt modifications can prevent a scenario in which an ex-spouse receives resources unintentionally, due to outdated paperwork.