There are so many things to consider in a divorce agreement that it can be easy to overlook certain parts. One factor that many experts say people tend to forget about is changing the beneficiaries on a person’s various accounts. It is important that a divorced person ensures that his or her assets are left to the person of his or her choosing. The state of Texas makes some of this process a bit more simple for certain financial accounts, but there are others that a person experiencing a divorce will want to know about.
First, in Texas, a divorce automatically designates the contingency beneficiary as the valid one for certain accounts. That means if a person listed his or her spouse as the beneficiary for his or her IRA or life insurance, a divorce will void that arrangement and designate the next person listed as beneficiary. Those who haven’t listed a contingent beneficiary will have assets transferred to the person’s estate.
However, when looking at accounts that are employer-provided, such as a 401(k) or a company life insurance policy, the rules fall under the Employee Retirement Income Security Act. This federal legislation says that beneficiaries stay in place unless the person who owns the account designates another person. If a divorced person passes away without changing his or her beneficiaries on employer-provided accounts, the assets will go to the person’s ex-spouse.
For this reason, and many others, it is imperative that someone in Texas who is considering getting a divorce seeks out professional legal advice. An experienced family law attorney can minimize the possibility of overlooking such an important detail as beneficiary designations. This way, the person can ensure that his or her legacy is left to the person he or she chooses.