In the event of a divorce, it is important to remember about changing the beneficiaries nominated on any life insurance policies and pensions (both employer and personal). Failing to do so could mean that, in the event of death, your assets would not be distributed in accordance with your wishes.
When Warren Hillman died in 2008 at the age of 66, his assets included a life insurance policy worth $124,558.03. The U.S. Supreme Court found that his ex-wife, who Hillman divorced 10 years before he died, was entitled to every penny of it.
All this because Hillman made a basic, and unfortunately all too common, estate-planning mistake: when he divorced he did not change the beneficiary designation for a life insurance policy.
A beneficiary designation is a document given to an insurance company or financial institution, indicating who should inherit certain assets that do not pass under a will or trust.
Forgetting to coordinate these non-probate assets, as they are called, with the rest of your estate plan can completely thwart your objectives, as it may have done for Hillman.
Perhaps he forgot about the life insurance policy. In any event, he didn’t change the beneficiary either when he got divorced, or after his subsequent marriage, or after being diagnosed with a rare form of leukemia from which he ultimately died.
Some states have laws protecting a subsequent spouse from such oversights. Washington state does not.
Words to the wise:
keep those beneficiary forms up to date. To change a beneficiary — for example, if you get married or divorced or your spouse dies — make sure to file an amended form.
Give us a call today, at 206-926-9848, if you would like some guidance. We will be able to instruct you on changing these designations and assist you in creating a customized estate plan that will ensure you will not make the same mistake as Warren Hillman.