Another important consideration with life insurance beneficiary designations concerns spouses who are not required to carry life insurance policies as part of their divorce settlement agreements but fail to substitute beneficiaries. For example, imagine husband and wife divorce in 2010. Following the divorce, husband forgets to name a different beneficiary in his life insurance policy. Under Texas law, if Husband forgets to change his life insurance beneficiary designation, his former wife probably doesn’t have a right to his benefits upon his death. Instead, his life insurance benefits would go to an alternate beneficiary. If Husband did not name an alternate, the insurance carrier typically pays the benefits to his estate. If he dies without a will, then his benefits are payable to his intestate heirs according to the state laws of intestate succession. If he dies with a will, his benefits are payable to his surviving heirs named in his will. It is important to make changes to your estate planning documents, your life insurance policies and your retirement policies to avoid these issues following divorce.
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