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Beneficiary designations supersede the terms of a will

Georgia residents may not know the ramifications of failing to change beneficiary designations after a divorce. Revising a will to disinherit a former spouse will not affect beneficiary designations on most policies.

After a divorce, the named beneficiary on a life insurance policy, a retirement account, a bank account or any other such instrument will often inherit the proceeds of the instrument even when those results contradict a will. While Georgia is unique in its law that prohibits a divorced party from inheriting under a will unless the will specifically permits it, Georgia does not have a law that has the same effect when an individual dies leaving an ex-spouse as the beneficiary on a life insurance policy or other similar instrument. Many such policies are not assets that pass through probate, so the will has no effect on the beneficiary designation.

In an attempt to address the situation where an ex-spouse inherits assets that the deceased never intended them to have, a few states have enacted laws that permit a life insurance carrier to determine the proper beneficiary. Alternatively, some states have adopted laws that prohibit an ex-spouse from receiving a distribution as a beneficiary unless the policy specifically states that the distribution is meant for that ex-spouse. Both of these solutions can be problematic for the divorced party whose alimony or child support is secured by the policy.

The situation is further complicated by the fact that laws often prohibit changing a beneficiary until a divorce is final. Some policies or retirement accounts will require the signature of both parties before either party can execute a change.

The complicated legal tangle of the divorce process can be overwhelming. It is difficult to think of every written instrument upon which one might have a named beneficiary. A divorce attorney can help a client figure out the steps they need to take to document their new status and protect their assets.

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