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Beware: Estate planning can benefit a former spouse

No matter how kind or generous, benevolent and forgiving, there are few Philadelphia residents who wish to provide an inheritance for their ex husband or wife. Without the proper estate planning measures, however, that is exactly what could take place. Many people are unaware that the provisions laid out within their will are not sufficient to prevent a former spouse from receiving wealth from a beneficiary designation.

A number of different types of accounts require the holder to name a beneficiary. Examples include life insurance policies, bank accounts, investment accounts and retirement savings. When a party is named as the beneficiary of such an account, he or she will be given the wealth held within after the holder passes away. This transfer takes place outside of the probate process, and in a very short timeframe following the death.

Many people have old accounts that they don't always think about when it comes to estate planning. These accounts can be pensions from an old job, retirement accounts that have not been rolled over into new vehicles, and bank accounts that are not with one's primary banking institution. If a former spouse remains listed as the beneficiary on any of these accounts, he or she will inherit the assets in the event of the death of the account holder.

In order to prevent this outcome, it is necessary to take the time to make a thorough review of all accounts, even those that hold small investments or are from many years ago. Failure to make the proper changes to the beneficiary designations on those assets can mean that there is less wealth to go to one's current spouse and any children born of that marriage. Being generous is an admirable character trait, but very few Philadelphia residents intent to provide for a former husband or wife in their current estate planning package.

Source: USA Today, "Your ex could get rich if you don't update your beneficiaries", Jeff Reeves, Jan. 14, 2016

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