Getting a divorce can be a stressful and overwhelming process. In addition to the emotional fallout that you, your spouse, and your children will face, you also must deal with dividing assets and property, child custody, child support payments, alimony, and other legal issues.
One important thing that people often overlook during the divorce process is their life insurance policy. In some cases, people want to remove their ex-spouse from their life insurance policy but are unsure of how to go about it. In this blog post, we'll discuss what happens to your life insurance policy if you get divorced in Nevada.
What Happens if I Pass Away Before I Remove My Former Spouse from My Life Insurance Policy in Nevada?
There's legislation in Nevada called NRS 111.781 that has altered the way life insurance policy proceeds are distributed after divorce. Once your divorce is finalized, NRS 111.781 automatically revokes all listed beneficiaries on your life insurance policies.
So, if you don't update your life insurance policy after divorce and pass away unexpectedly, it'll be treated as if you died intestate. If your life insurance is treated as if you died intestate, it will be distributed to your closest relatives based on Nevada’s intestate succession laws.
Should I Still Update My Life Insurance Policy After I Get Divorced?
Even though NRS 111.781 may reduce the urgency to update your life insurance policies and inform third parties about your divorce, it is still important not to overlook this step. Remember, unforeseen events could cause complications after your passing.
Additionally, it's crucial to note that third parties are not responsible for how your assets or property are distributed if they were not informed about your divorce. Taking the necessary steps to update all legal documents after divorce should remain a priority.
Here are four tips that can help you manage your life insurance policy after your divorce:
- Review Your Divorce Agreement – When reviewing the divorce agreement, it's crucial to carefully read through the document. It is important to note that life insurance policies are frequently utilized to secure alimony and child support payments. If you have any inquiries, it's advisable to discuss them with your legal representative.
- Choose a Coverage Amount – To determine the appropriate amount of coverage, consider your ex-spouse's financial situation if alimony and/or child support payments were to cease. It's recommended to have discussions with both your insurance agent and divorce attorney to arrive at a specific figure.
- Choose a Policy Duration – Life insurance coverage duration varies depending on factors such as the length of court-ordered alimony and/or child support. Typically, these needs are temporary. You can inquire about a term policy from your insurance agent. Such a policy can help meet financial obligations related to raising your children or providing financial support to your ex in the event of your passing.
- Re-Designate Beneficiaries – When going through a divorce, it's crucial to update your life insurance beneficiaries. In Nevada, NRS 111.781 automatically disqualifies an ex-spouse from receiving life insurance proceeds unless the insured person specifically designates their former spouse as a beneficiary after the divorce. If you don’t want to designate your ex-spouse as a beneficiary, you can designate your children as beneficiaries or set up a trust to handle the proceeds for them. If your children are still minors, you can appoint an adult custodian or trustee to receive and manage the benefits on their behalf. Remember to be clear about when the children will receive the money and what percentage each will get. It's important to note that once the insured person passes away, beneficiaries cannot be changed, so it's essential to keep your policy up to date.
For more information about life insurance and divorce in Nevada, contact Leavitt Law Firm today. Call us at (702) 996-6052 or reach out to us online to schedule a confidential consultation. To learn more about our team of family law attorneys, read our clients’ testimonials.