Savings bonds. Who still has savings bonds anyway? Well, a lot of people, and it is a common issue in divorce cases. Any asset acquired during the marriage is subject to equitable distribution. Even a savings bond, which would be held in the name of one spouse.
The resolution of the issue is simple. Either you cash in the bonds and equitably (probably equally) distribute them, or one person keeps the bonds. What happens if the Husband is awarded the savings bonds, the Wife is the paid-on-death beneficiary, and the Husband dies without changing the beneficiary… who owns the bonds?
In the case of In the Matter of the Estate of Michael D. Jones, Deceased, the New Jersey Supreme Court dealt with precisely this issue. The court noted that the Husband had the ability to change the paid-on-death beneficiary after the divorce and did not do so. Specifically, the Court noted that under federal law, the Treasury Department will recognize a divorce decree with respect to the distribution of bonds and any beneficiary changes.
Second, the Court noted that the bonds passed ‘outside of the estate.’ Some assets are part of the decedent’s estate at death and handled through the probate process. And some assets are not. For example, a retirement account with a paid-on-death beneficiary designation is not part of the estate.
Often times, estate law and family law intersect. However, this is something that can be easily avoided if you take the necessary steps to transfer all assets after a divorce. If you are divorced and have not completed all of the transfers, then you need to consult with an experienced attorney, like the attorneys at Baker Legal Group.
Some common financial issues that need to be resolved after a divorce may include:
- Change in beneficiary designations for retirement accounts, bank accounts, investment accounts, life insurance, etc.
- Closing joint bank accounts or credit cards
- Prepare of QDROs (to distribute retirement accounts)
- Transfer of vehicles or real estate
The attorneys at Baker Legal Group can assist you with finalizing the details after your divorce. Our skilled and knowledgeable attorneys can review your settlement agreement and help to identify some of the issues that may need to be resolve.