Divorce and Life Insurance

Divorce can result in many different things: hard feelings, divided assets, kids splitting time between two houses, and lots of attorneys fees. One thing that doesn't automatically happen, however, if changing your beneficiary designation on your life insurance policies.  

Divorce Cuts Off Inheritance

North Carolina law precludes an ex-spouse from inheriting from your estate. For the purposes of inheritance, it treats an ex-spouse as a predeceased beneficiary if the ex-spouse is still named as a beneficiary of your will. So, legally speaking, it's as if your ex is dead for the purposes of inheriting from your estate - it's a legal impossibility.  

But Nothing Else

North Carolina law does not, however, cut off your ex-spouse's rights to receive a benefit from your death in other ways, including retirement accounts in life insurance. Unless the separation agreement states otherwise, if you were to pass without removing your ex-spouse from your life insurance beneficiary designation, they may get the entire benefit, to the detriment of your kids or extended family.  

Review Beneficiary Designations Often

A crucial part of maintaining an effective estate plan is regularly reviewing and updating where needed. Divorce is a substantial life event which warrants an update to your plan, but it also requires an update to your life insurance beneficiary designations. Death can also impact your designations. Regardless of your circumstances, reviewing your designations, and the rest of your estate plan, regularly is a smart move.