Effective May 2, 2023, there was an important change to the Divorce Code in the form of an amendment to Rule 1920.76, which requires the following language in a divorce decree:
The parties shall reaffirm or change the beneficiary status on any life insurance policies, annuity contracts, pensions, profit-sharing plans, or other contractual arrangements providing for payment to a spouse if it is the intention of one of the parties to keep or change the other party as a beneficiary. Failure to do so may result in revocation of the beneficiary designation pursuant to 20 Pa.C.S. § 6111.2 (Effect of Divorce or Pending Divorce on Designation of Beneficiaries).
What does this mean for you?
Typically, when parties finalize a divorce, they forget about a very important, lingering action they need to take. Most people fail to think about changing their beneficiary designation on their life insurance policies or retirement plans. This results in their ex-spouse remaining the beneficiary on these plans. If the spouse with the plan dies and has not updated his or her beneficiary designation, the ex-spouse can still be entitled to receiving these funds since the ex-spouse is listed as the beneficiary. This new language required in all divorce decrees serves as a reminder to all parties that while they can celebrate the divorce being final, they still have steps that should be taken to protect their assets.
Conversely, if the parties have negotiated a divorce agreement that provides that the opposing party is to be the beneficiary on a retirement plan or life insurance policy, this amendment now dictates that any settlement agreement must include a specific provision that confirms the beneficiary designation.
Anyone who is going through a divorce should consult with an experienced, local attorney to ensure that the person’s rights are being protected. The right attorney can be an advocate for an individual going through a divorce and alleviate much of the stress that would result from navigating an unknown and emotionally charged situation.
