The decision to divorce in New Jersey is seldom made lightly. Once the decision has been reached, there are a number of issues to be addressed. Not least among these is the division of assets. Among assets that are occasionally overlooked in divorce proceedings are items such as life insurance policies and 401(k)s. It’s not that their existence is overlooked, but that the designated beneficiary status is, and in many cases, a spouse is designated as the primary beneficiary.
Failure to change the beneficiary can result in unintended consequences. If an ex-spouse is named as a primary beneficiary on a life insurance policy or retirement account, he or she may receive the funds, even if that was not the intent of the decedent. In some states, including New Jersey, a law now exists that replaces the contingent beneficiary as the primary upon dissolution of the marriage based on the belief that the deceased did not intend for the funds to go to an ex-spouse and that failure to change the information was an oversight.
Issues such as these can land in the courts and take years to resolve. One such case involving a life insurance policy was recently decided by the U.S. Supreme Court. The state law cited in the case allowed for removing the ex-spouse as the beneficiary. The case was brought on the grounds that the policy had been purchased before the state law went into effect but the court ruled that the law removing the ex-spouse as beneficiary could still apply.
When considering a divorce in New Jersey, a person may wish to have a confidential conversation with a knowledgeable family law attorney. An experienced lawyer may be able to assist one in reviewing all assets and related beneficiary designations. Attempting to make sure that all such designations are up to date may save one’s family from experiencing unforeseen consequences in the future.