Marriage is for better or for worse, in sickness and in health so long as we both shall live except, when it’s not.  Everyone goes into a marriage with the intention of it being forever but people can change.  Unfortunately sometimes it just doesn’t work out.  In all of the confusion of divorce proceedings and major life changes minor things that can be overlooked in the present can have major consequences in the future.  One of those small oversights can concern your life insurance policies.

Let’s look at the case of my in-laws as an example.  They were married in 1976, raised 2 girls, house, white picket fence, dog, the whole enchilada.  By 2000 they had drifted apart and were embroiled in very contentious divorce proceedings.  Since he was a very successful businessman they were many assets that needed to be divided between the 2 of them.   Unfortunately 10 years later my mother-in-law passed away suddenly and tragically.  She was very thorough with her financials and the type of person to plan ahead and my wife and sister-in-law stood to inherit a good amount of money.  The problem?  My mother-in-law never changed the beneficiary on one of her policies from her ex-husband.  Now, this story has a happy ending since my father-in-law is a stand-up guy and wasn’t hard pressed for money.  We ended up telling him he was listed as the beneficiary and without even being asked he immediately offered to sign the check over to the estate once he received it.

We were lucky in that situation, there was no animosity and no major financial issues.  But money, especially large amounts, can make people do funny things.  What if my mother-in-law had remarried or if we weren’t on speaking terms with my father-in-law?  That could have easily turned into an even messier situation than the original divorce.  There are several high-profile examples of how a simple oversight can cause major headaches.  Take the U.S. Supreme Court case of Hillman v. Maretta in which Warren Hillman passed away and in his will left everything to his wife including a life insurance policy valued at $124,500.  But, Warren neglected to change the beneficiary from his ex-wife of 10 years.  After several years of legal proceedings going all the way to the Supreme Court it was ruled that ex-wife Judy Maretta was entitled to the entire $124,500.

It’s important to make sure you know where your money may go after you’re gone.  So, if you find yourself in this position make sure you update your beneficiaries so your assets go where you want them to.