Even after a divorce, an ex-spouse can remain a beneficiary

From wills to insurance policies, divorce isn't always a clean break

When most people come out of a divorce, they largely expect that their financial obligations to their ex-spouse will have ceased. Of course, in cases involving child or spousal support financial commitments remain, but some people may be surprised to learn that they may stay attached to an ex-spouse in less expected ways as well. Certain benefits, such as life insurance proceeds, may be part of a divorce settlement to guarantee payment of certain financial obligations contained in the agreement. In addition to settlement agreements, when it comes to certain legal and financial documents, such as wills and insurance policies, an ex-spouse or his or her family may remain beneficiaries despite a divorce having been finalized. Because these commitments can come as a shock to many people, it is important to talk to a divorce attorney to understand what to expect.

Insurance and wills

When it comes to life insurance, reviewing a policy regularly-especially after a divorce or new marriage-is imperative. A 2013 U.S. Supreme Court case shows just how risky it can be not to change the beneficiaries on a policy after a divorce has become final. According to the Wall Street Journal, in that case a deceased man's ex-wife successfully claimed the payout from his life insurance policy despite the man having remarried. Because the policy hadn't been updated to name the man's new wife, his ex-wife was declared the legal beneficiary.

Sometimes, however, it is not the ex-spouse that is the direct beneficiary but rather his or her extended family. In one case, for example, a deceased woman's ex-father-in-law successfully claimed her house because he had been named the secondary beneficiary in her will, which had been written before she divorced the man's son. While state law dictated that the ex-husband, who was named as primary beneficiary, couldn't claim the woman's estate, it made no such prohibition against the man's extended family doing so.

Protecting yourself in divorce

The above examples show how people who are coming out of a divorce can remain obligated to an ex-spouse in sometimes unexpected ways. As USA Today reports, when it comes to divorce many people fail to take long-term consequences into consideration when making major decisions.

In addition to failing to appreciate that an ex-spouse may have some claim when it comes to insurance or an estate, it is also important to appreciate the other details that sometimes get overlooked in divorce. Tax implications, for example, are of the utmost importance when it comes to dividing property. Many people end up fighting for the couple's marital or rental home, but fail to consider that much of the value of that home may be lost to property tax or capital gains tax. Such details may get overlooked by divorcing spouses, which is why professional help should be sought when making such major decisions.

Finding the right advice

While divorce is never a happy experience, when it does happen people should make sure they reach out to an attorney who has the breadth of knowledge necessary to deal with whatever issues may arise. A full range law firm dealing not just with family law but with other areas of law, like business and estate planning, can provide a comprehensive strategy when these different areas of the law intersect.