Redo your beneficiary designations if you remarry

We’ve often reminded people that it’s important to update all your beneficiary designations after you get divorced – including wills, life insurance policies, bank and brokerage accounts, retirement plans, and so on.

One thing that gets less attention, but is also very important, is to change your beneficiary designations again if you remarry. Failing to do so can create problems if something should happen to you unexpectedly.

For instance, a New Jersey man named Michael Fox bought a $100,000 life insurance policy in 1992 and named his wife as the beneficiary. After he got divorced, he changed the beneficiary designation, naming his sister instead.

Michael remarried in 2012. His new wife, Evanisa, was a Brazilian national. As part of his sponsorship of Evanisa’s citizenship application, Fox agreed to support her at a minimum of 125 percent of the poverty level. But he never updated his life insurance policy, and he was killed a few months later in an automobile accident.

Evanisa went to court. She claimed that it would be very difficult for her to support herself without the life insurance proceeds, and that the court should presume that Michael meant to change the beneficiary to her.

But the court said no. It ruled that unless Michael affirmatively changed the beneficiary to Evanisa, the money should go to his sister instead.

Interestingly, New Jersey has a law that says that if a person names a spouse as a beneficiary in a life insurance policy and then gets divorced, the beneficiary designation is automatically revoked. Evanisa said the reverse should also be true – if a person gets married, it should be assumed that the new spouse becomes the beneficiary. But the court said that’s not how the law was written.