Change of Beneficiaries Should Not Be Forgotten

As a rule, divorce does not effectively change a beneficiary designation unless the divorce decree makes a stipulation to change the beneficiary. It could be argued that the individual retirement account (IRA) owner wants the former spouse to remain the beneficiary of this IRA. Unless a court order states otherwise, the former spouse may be entitled to receive the assets if he or she is the named beneficiary on record at the time of the IRA owner’s death.

Assets with a designated beneficiary ā€“ life insurance, pension plans, IRAs, annuities, investment and bank accounts ā€“ bypass a will. Upon the death of the owner, they are paid to the person identified as a beneficiary.

After a divorce, naming the right beneficiary is very important.

If there are children and they are named beneficiaries, a court guardianship is established for the minors. Some people name the former spouse to manage the funds for the child until he or she achieves a majority, which is 18.

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