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Changing beneficiaries after divorce is important

As some New Jersey residents know, the individual designated as a beneficiary on insurance policies, bank and retirement accounts remains the beneficiary until that individual is removed. In the case of divorce, this may be overlooked, and an ex-spouse may collect in the event of the other spouse's death. Variations in state statutes may seek to circumvent this, but whomever is named as the beneficiary, despite marital circumstances, will receive the proceeds under federal law.

During a complex divorce, it is possible to forget to change the beneficiary on various accounts and policies. Once the divorce papers are filed in court, it is impossible to change the beneficiary designation until after the divorce. Prior to filing, this may be done but not on all accounts. For instance, on Employee Retirement Income Security Act accounts, a spouse needs written permission from the other spouse.

A common misconception is that changing one's will to remove an ex will cover beneficiary designations. The only way to do this is to remove the individual from each policy or retirement account officially. There have been many cases where a beneficiary named prior to divorce and not removed received the funds he or she was originally selected to receive.

In some states, laws deal with beneficiaries named on an insurance policy. In one state, if the deceased is divorced from the beneficiary, the law looks at whether the decedent is remarried or single. In another, if the divorced beneficiary has not been relisted as a beneficiary following the divorce, he or she will be unable to collect.

Consulting an attorney about beneficiaries may be helpful when divorce is anticipated or after the marriage has been dissolved. The attorney may provide guidance as to the procedure for changing the beneficiary on such accounts.

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