Major Life Change? Review Your Retirement Account Beneficiaries

If you have recently experienced a major life change, you need to review your beneficiary designations and estate planning documents.

Who Should Review Their Beneficiary Designations?

Anyone who is recently divorced, remarried or any person who had children should review their beneficiary information.

What Documents Should You Review?

  • Retirement beneficiary information including pension, profit-sharing, 401(K), IRA, and/or Thrift Savings Plan beneficiary information.
  • Life Insurance policies
  • Annuities
  • Transfer on death bank and brokerage accounts

Why Should Review Your Beneficiary Information?

There are numerous cases where an account owner has divorced and failed to remove his or her ex-spouse as beneficiary of their account.  It can be frustrating to the surviving children that their former step-parent gets a windfall from their parent’s retirement account or life insurance policy.  Even though the account may be address in a Final Decree or a Separation Agreement, you must still make the change with your account or plan administrator.

Additionally, if a child is named as your beneficiary, make certain that any children born after the document was initially signed have been added as a beneficiary.  If you fail to add them, they may not receive any benefit from the account.

What Happens if You Fail to Review Your Beneficiaries?

If you fail to review your beneficiary information, federal or state law may decide who is the beneficiary of your account.

I Changed My Will.  Isn’t that Enough?

Simply changing your will to disinherit your ex-spouse is not enough.  The accounts we are referencing in this piece are non-probate assets.  Meaning they do not pass under the terms of a will.  The beneficiary designations supersede the terms of the will.  Therefore, you need to change your beneficiary designations in addition to executing a new will.

What Should I Do Now?

  • Check the default provisions of the documents governing your retirement account.
  • Check with your plan administrator to determine who your beneficiary is.
  • Consult your accountant to determine the tax implications of naming someone as your beneficiary
  • Make any changes in beneficiary with your plan or account administrator
  • Request a receipt from the administrator to ensure all changes were made correctly.
  • Please note you cannot change your designations to “cut out” your spouse some of your non-probate assets like pensions or profit sharing plans, while you are still married without your spouse’s consent.  Federal law prohibits removing your spouse from some types of accounts without your spouse’s consent.

We are experience family law and estate planning attorneys.  If you need help with a will, power of attorney or estate plan in Chesterfield, Colonial Heights, Dinwiddie, Hopewell, Petersburg, Prince George, or Sussex. Give us a call at (804) 668-5327 or email us at Contact@paulperduelaw.com to schedule a consultation.