Bring Clarity to Your Finances™

Clarity Financial Planning Services is an advocate for your financial future who takes a holistic approach to your needs and goals.

It is so Important to Update Your Beneficiaries

We’ve mentioned how not updating your beneficiaries may haunt your heirs and told of how the case of a widow versus an ex-wife went all the way to the Supreme Court because a man died and had not changed is designated beneficiary.

MarketWatch’s Moneyist column has another tale of why it is so important to update your beneficiaries but this one is a little different. In “My father’s ex-wife stole his life insurance, breaking the terms of their divorce decree,” an advice seeker wonders how he can recoup the loss of a life insurance policy that his father’s ex-wife cashed when she wasn’t supposed to do so.

Unlike the previously mentioned stories in which the beneficiary just wasn’t changed, the letter writer has his father’s divorce decree on his side: according to the decree, his ex-wife was not entitled to that money. However, since the father did not actually change the name of the beneficiary on the policy, the insurance company paid it out to her. 

The columnist advised that while the man can stake a claim because “..the divorce decree trumps a private contract in the eyes of the law. If your former stepmother agreed to forego the proceeds from this policy, she has a responsibility to uphold that — even if your father failed to take her name off it,” it will cost him to pursue the case in court.

This story and similar cases, such as the one where a widow realized that her husband had not actually signed his will are, as Moneyist observes, “cautionary tale[s] to always complete important paperwork.” While many people do not have wills, those that do take the time to create wills and do other elements of estate planning need to complete the process by signing documents once they are in order and updating beneficiaries after a life event.