Separation of Assets Has Lifelong Consequences

People think that the separation of assets that occurs during a divorce is a one-time event — that once it happens, it’s done, and the effects are over. That’s just not the case; oftentimes the financial effects of divorce linger until — or even beyond — the end of your life.  While most couples name either the cost of divorce or custody battles as the most stressful thing about a divorce, the separation of assets consistently evokes a vast amount of negative emotions, which occasionally makes couples rush through it. It’s very important, however, that you slow down and think about the long-term consequences of the decisions made as assets are being separated. Especially about these items:

End-of-Life Plans
Most divorcing couples assume that when assets are separated, their attorneys will automatically take care of their wills, trusts, and other end-of-life planning. Many do, but it’s never safe to assume that they will: you should always double-check to ensure that not just your ex, but all of your former in-laws are removed from your plans.

It’s also crucial to make sure that after the documents are changed, they are properly re-filed and copies are provided to everyone affected by the change. There are hundreds of cases every year of out-of-date wills being filed and giving exes and ex-in-laws access to inheritance they shouldn’t have because the latest documentation can’t be found.

Benefit Accounts
Similarly, life insurance policies, some annuities, and other accounts that have named beneficiaries are frequently lost track of during a divorce, and attorneys don’t automatically address such accounts in most circumstances. If you named your spouse or one of their children as a beneficiary of such an account and then forgot that it was even the kind of account that had a beneficiary, you could easily end up leaving your new spouse or biological child bereft of something that they have every reason to believe was coming to them. Taking care of renaming beneficiaries is something that isn’t technically part of the division of assets, so no one will remind you of it, but it should be done at the same time so it doesn’t become a forgotten detail decades later.

Retirement Accounts
It’s fairly standard procedure for divorce settlements to declare that a retirement account should be split between the exes when it reaches maturity. It’s also incredibly normal for people to realize at 70 or 75 that their exes’ retirement account matured several years ago and they saw exactly none of it — and if the ex in question changed companies or even job titles in the interim, it can be hard to get anyone to legally enforce the divorce settlement after the fact. That means it’s important to keep track of your exes’ job status, and ask your lawyer to update the divorce settlement with a Qualified Domestic Relations Order to track the changes anTd the status of the retirement account.

There are most certainly other ways in which a divorce creates lifelong financial concerns for both participants — and these are certainly not the most complicated or unusual aspects of the separation of assets. But they are things that affect a good number of everyday people, and anyone getting a divorce should consider them.