What beneficiary designations should I update after divorce?

Updating beneficiary designations after divorce is one of the most critical and often overlooked post-divorce tasks. Beneficiary designations on financial accounts generally override what is stated in a will or divorce decree, meaning that if your ex-spouse is still listed as the beneficiary on your life insurance or retirement account, they may receive those assets regardless of what your divorce settlement says.

Accounts and policies that commonly need beneficiary updates include life insurance policies, 401(k) and other employer-sponsored retirement plans, IRAs and Roth IRAs, pension plans, annuities, bank accounts with payable-on-death designations, investment and brokerage accounts with transfer-on-death designations, and Health Savings Accounts.

It is important to note that some beneficiary designations cannot be changed during a pending divorce. Many states have automatic temporary restraining orders that prevent changes to insurance and financial accounts during the divorce process. Check with your attorney about what changes you can and cannot make while your divorce is pending.

For employer-sponsored retirement plans like 401(k)s, federal law (ERISA) may require your current spouse's consent to designate anyone other than the spouse as primary beneficiary during the marriage. After divorce, this requirement no longer applies.

Also review and update your will, power of attorney, healthcare directive, and any trusts. These documents typically do not update automatically upon divorce.

DIVORSAY's Phoenix Plan includes a beneficiary update checklist to ensure every account and policy is reviewed and updated after your divorce is finalized.