DESIGNATING THE RIGHT BENEFICIARIES

If you have an individual retirement account (IRA), a life insurance or accidental death insurance policy, or any retirement benefits at work, you have designated a beneficiary. Retirement plans can include deferred compensation plans, pensions, profit-sharing accounts, stock bonus plans, 401(k)s, disability plans, and death benefits. Employment benefits also often include plans for disability or accidental death.

On any of these benefits or accounts you may carry, you have designated a beneficiary to receive money in the event of your untimely death. These benefits or accounts do not pass through your will or estate--they go to named beneficiaries properly designated by you, usually on a company form.

The Pennsylvania Supreme Court awarded a deceased ex-husband's retirement death benefits to his ex-wife because he had never removed her from his beneficiary designation forms at his workplace. Unwilling to presume that divorce "in all cases automatically spells the end of interest in or even concern for one former spouse by the other," the court found that a validly executed beneficiary designation is not disrupted, set aside, or in any way affected by a subsequent divorce.

Many divorce agreements seem to revoke all of the rights and privileges of marriage. Following divorce, many people assume that their spouses no longer have any rights that are not spelled out in the divorce settlement agreement. If you are divorced, be sure you understand your divorce settlement agreement and review all of your employment benefits and insurance policies to be certain that they comply with your agreement. You can change your beneficiary designations if doing so does not violate your agreement or a final court order.

It is also important for married people to realize that where one spouse dies during the marriage, under some circumstances the surviving spouse can elect to take "against" the will if he or she is not adequately provided for in the deceased spouse's will. With the exception of some kinds of annuities, surviving spouses cannot overcome written beneficiary designations on life insurance or accidental death insurance or on pension, profit-sharing, stock bonus, deferred compensation, disability, death benefit, or retirement plans established by an employer.

Whether you are an employee-participant or a potential spouse-beneficiary under a retirement plan, or whether you have an interest in an IRA or a life insurance policy, you should periodically review your beneficiary designations. It is equally important to be aware of how your spouse or ex-spouse has designated his or her beneficiaries.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

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