For many New Jersey residents, bringing a marriage to a close is an onerous process, one that is filled with a seemingly endless list of to-do items. One important need that is often overlooked at the end of a marriage is the need to make changes to one's estate planning documents. This is especially true in regard to life insurance, which falls outside of the provisions laid out in one's will.
Most spouses list their partner as the beneficiary on a life insurance policy. In the event of a divorce, alterations are usually intended. However, many people simply never get around to making those changes. Some believe that if they create a new will, then the terms held within that document will dictate how assets are distributed. In reality, however, life insurance and many other types of assets for which a benefit is named will simply pass down to the individual named in the account.
That can mean leaving a significant windfall to a former spouse, something that few individuals intend. If a person has gone on to marry again, or to have children with a new partner, then things become even more complicated. If a former spouse remains listed as the beneficiary of a life insurance policy, then the intended heirs may be forced to take the matter to court.
Many states have laws on the books that outline how these types of issues should be resolved. However, those laws can change, and the parties might also have moved from New Jersey to a different state with different guidelines on the matter. The best way to ensure that one's final wishes are honored after the end of a marriage is to overhaul all aspects of estate planning, including changing beneficiary designations as desired.
Source: natlawreview.com, "Divorces Can Be Messy - For Life Insurers", Charles J. Vinicombe, April 18, 2017