Changing Your Beneficiary Designations

 After a party completes their divorce, there are often many things that they need to do to finalize matters. However, one item that many overlook is changing their beneficiary designations after divorce to remove their ex-spouse.

Many different kinds of assets can have beneficiary designations on them. Sometimes, these are referred to as transfers on death or payable on death designations. Generally, these can be referred to as the acronyms of TOD’s are POD’s.

With beneficiary designations, POD’s or TOD’s, the idea is that these assets pass at death outside the probate court. When assets go into probate, the time it can take for these assets to be distributed can be lengthy. Going through the probate court can also result in lawyers’ fees and lots of red tape. (It would be very beneficial to meet with an estate planning attorney after divorce to not only discuss this but to also determine if any changes need to be made to a party’s will.)

However, before divorce, most individuals name their spouse as the beneficiary or the TOD or POD beneficiary, if the assets are not jointly titled in the first place. The idea is that the assets will go to the spouse upon death.

In the case of a second or third marriage, that is not always the case. Often, in these instances, the beneficiaries are children from a prior marriage.

In most counties in Texas, you cannot make these changes while the divorce case is pending so after the divorce is finalized, a party must look at making changes to their beneficiary designations, including their TOD’s and POD’s.

In many instances, the beneficiary designation can be changed to the children or a trust set up for the minor children if they are still minors. In other cases, it might be a family member or new significant other.

Many different kinds of assets can have beneficiary designations or TOD’s or POD’s, but these are some common ones to check after the divorce:

1.) Life Insurance;

2.) Retirement accounts;

3.) Investment accounts;

4.) Stocks and bonds; and

5.) Bank accounts.

Thus, it is often advisable for anybody to get with an estate planning attorney to discuss the matter after a divorce. In addition, speaking to whoever does their investing and banking is often wise. Working hand-in-hand, an estate planning attorney, investment representative, and banker can frequently clean up all the beneficiary designations.

If a party does not change their beneficiary designations, the assets will initially go to whoever was the beneficiary before the divorce. Unfortunately, in far too many cases, that will be the ex-spouse. In Texas, there are certain retirement plans that will not honor the original designation if a party gets divorced. However, it is not worth the risk, so be sure to make the change.

The assets will pass through the probate court if no beneficiaries are listed. But, again, this is not what most parties want with the red tape, attorneys’ fees, and prolonged process.

Rob McAngus, Partner with Verner Brumley Parker, P.C., is Board Certified in Family Law and his practice is devoted primarily to family law, including high conflict divorce, custody cases, and complex property issues. In addition to being selected on the Board of Directors for the Family Law Section of the Dallas Bar Association; he values your priorities as a parent and works with you to achieve the goals that will help transition your family to a new normal.  As both an adopted child and a member of a blended family, Rob can provide a unique perspective in the practice of family law.

Rob has been recognized in Super Lawyers as a Rising Star in 2016 through 2021, and recently The National Advocates recognized Rob as one of the Top 40 Under 40.  He can be reached by calling 214.526.5234 or email at rmcangus@vernerbrumley.com.  Mr. McAngus received his bachelor’s degree cum laude and master’s degree from Baylor University and graduated cum laude from the Dedman School of Law at Southern Methodist University.