When a marriage ends, it's important to pay close attention to the property division issues. That is especially true in a challenging economy, such as the one we've had in Farmington Hills and throughout Oakland County in recent years.
The widespread economic pain has raised the stakes for Michigan marital property division decisions. Making sure the property and debts are divided fairly matters a lot when jobs are so scarce and wages so stagnant for so many people.
One aspect of property division is making sure that beneficiary designations for life insurance and retirement accounts are properly updated after a divorce. If these forms are not changed properly, an ex-spouse could potentially assert a right to the proceeds of a life insurance policy or a retirement account.
Federal law states that, as a general rule, a surviving spouse automatically inherits a 401(k) plan. If you have remarried and have children from an earlier marriage, talk with a property division lawyer about what steps are needed to pass 401(k) money along to them. You may be required, for example, to have your new spouse execute a consent form allowing non-spouse beneficiaries.
Keep in mind, too, that divorce isn't the only life event that calls for review of beneficiary designations. Besides remarriage, others include birth of a child and death of a beneficiary.
It's also good to be aware that there are numerous specific rules that apply to IRA accounts. That's why it's good to get advice from a knowledgeable divorce lawyer about how your marital property settlement should be structured.
Source: Who'll benefit from your IRA? Not who you think," CBS News, 1-23-12