Beneficiary Forms or Estate Planning Documents?
Many people may be surprised if not shocked to learn that an individual named as the beneficiary on a beneficiary form is entitled to the money regardless of what an individual’s will, trust document, or divorce decree states.
In January, 2009 the Supreme Court unanimously ruled that beneficiary forms trump all other documents. In Kennedy v Plan Administrator for DuPont Savings and Investment plan, the court ruled that an ex-spouse should receive the retirement plan benefit because she was named on the beneficiary form even though she waived her right to any of her ex-husband’s retirement plan benefits under the divorce decree. The court ruled that the plan must pay the beneficiary named on the beneficiary form even though there were contradictory signed agreements between husband and ex-spouse.
The deceased intended to leave his retirement plan balance to his daughter, but never updated the beneficiary form. The Supreme Court said that said that you have to look at the terms of the plan and pay out the death distribution to the person named on the beneficiary form.
The Bottom Line
Be proactive, if you have recently gone through a marital status change or have made updates or any other changes to your will, trusts, divorce decree, or other documents, check and make sure that your beneficiary forms carry out your wishes in accordance with your estate planning documents.
It is not enough to just check your IRA or 401(k) beneficiary forms. Double check all retirement plans, pension plans, life insurance policies, or annuities that you own.
At Wealth Dimensions, we work with our clients on an ongoing basis to make sure that any changes that may occur are noted and that all necessary documents are updated for beneficiary changes.
