In Hillman v. Maretta, the U.S. Supreme Court was faced with the question of whether an ex-wife was entitled to proceeds of a life insurance policy when her former husband died. Before his death, he remarried but never changed his designated beneficiary to the new spouse. Although Virginia state law permits the new spouse to sue the ex-spouse for the proceeds in such an instance, the Court ruled that a federal law, that awarded benefits to the named beneficiary, preempted the state law. Therefore, the ex-wife inherited approximately $125,000 because her ex-husband never changed his beneficiary. While an extreme case, this points out the importance of reviewing financial and other documents after a divorce. Let’s address a non-exhaustive list of documents and accounts that you should review:
Bank/Investment:
- Credit cards from banks and other vendors
- Checking and savings accounts
- Direct deposit payroll, etc.
- Investment / stock holdings
- Payable-on-death (POD) bank accounts
- Pension accounts
- Retirement accounts
- Transfer-on-death (TOD) brokerage accounts
- Other financial holdings
Reoccurring Accounts/Debts:
- Car loans / lease payments
- Ongoing subscription services (e.g., cable/internet, phone, Amazon, Hulu, anything with an automatic renewal)
- Utilities (e.g., gas and electric bills)
- Other loans and debts (as debtor or creditor)
Land / Real Property Holdings:
- Mortgages
- Land titles
- Leases or easements
Insurance policies:
- Car insurance
- Home or renters insurance
- Life insurance
- Other business or umbrella policies
Estate planning:
- Grants of guardianship for minor children
- Last will and testament
- Trusts
In some cases, it may be a simple matter of updating an address. But in others, things may be more involved. For example, you may want to change a designated beneficiary to a life insurance policy. For a will or trust, you may want to create new financial protections for a beneficiary—particularly if you have children under the age of 18.
And while you should start working on these updates, before you officially change anything, always first check with your attorney or a related financial professional. For example, those retirement accounts need to be updated, but you need to comply with federal requirements when doing so; otherwise, you may be hit with hefty tax penalties.
If you need help getting your financial documents in order, send us a message or call us at (314) 454-9100 today. We can help.
Scott’s practice is dedicated to assisting entrepreneurs, investors, emerging and established businesses with the unique and often challenging issues they meet throughout the formation and growth process: from entity formation, to the management of founder relationships and economics, to the protection of intellectual property, to the financing of growth and navigating securities law compliance. He assists clients as they continue to grow and develop, whether this involves merger and acquisition activities, international licensing and distribution arrangements or counseling of directors and officers.
Scott is chair of the firm’s Securities practice. His practice is focused on advising a wide range of clients on SEC matters, securities transactions and corporate governance. He represents issuers, investment banks / financial intermediaries and investors in financing transactions, including public offerings and private placements of equity and debt securities.
