Texas residents whose marriages are ending might want to consider updating their beneficiary designations before filing for divorce. Once the petition has been filed, spouses will not be permitted to make changes to beneficiary designations on certain types of financial accounts until after their divorce is finalized.
Although many people believe that updating a will after a divorce is an effective way to disinherit an ex-spouse, this is not necessarily the case. Regardless of what is written in a person’s will, the instructions will be superseded by the beneficiary designations that are attached to certain financial accounts. This means that a person’s ex-spouse could potentially inherit the assets from their retirement accounts, life insurance policies and bank accounts unless the designations are changed.
To completely disinherit an ex-spouse or future ex-spouse, a person must change the beneficiary designations on each of their financial accounts individually. It is also important to know that certain types of accounts fall under the jurisdiction of the Employee Retirement Income Security Act. The accounts covered by ERISA include 401(k) plans as well as employer-provided defined benefit plans. ERISA mandates that a spouse will need to affirmatively consent to the change in beneficiary designations on those types of plans.
People who are planning a marital dissolution might want to talk to an attorney about the best way to manage all of their financial accounts. An attorney can be helpful in reviewing the terms and beneficiary designations of the client’s individual retirement account, life insurance policies and 401(k) plan in order to ensure that the assets contained in those accounts will be distributed in accordance with the client’s current wishes.