Divorce and Retirement – Changing Beneficiary Designation

For many going through divorce, having your judgment entered and the divorce finalized can feel like you’ve crossed the finish line. While having a filed judgment provides enforceable orders and resolves many issues, there still may be steps you need to take to protect yourself and your finances. In fact, without making necessary changes after the judgment, it may be possible that years after your divorce your ex-spouse could still inherit your retirement account. As with everything, it’s important to have the correcting timing when dealing with divorce and changing your beneficiary designation.

Does a Divorce Judgment Supersede Retirement Plan Beneficiary Designations?

In the case of Egelhoff v. Egelhoff, a husband predeceased his ex-wife but did not remove her name as the beneficiary of his retirement, resulting in his ex-wife inheriting his 401(k) plan. Even if all or half of your pension and/or 401(k) was awarded to you in the divorce, you still need to take the next step and remove your ex-spouse as the beneficiary of your retirement accounts. If you do not take this step, your ex-spouse will inherit your retirement plan if you predecease them. Why? Because private company pensions and 401(k) plans are governed by federal law, and the United States Supreme Court has held that your beneficiary designation holds, even after a divorce judgment has divided the plan.

Time is Everything When Changing Beneficiary Designations

Changing your retirement plan beneficiary designation(s) during your divorce is prohibited but making the change(s) after your divorce is final is your responsibility. Updating the beneficiary forms should not be limited to your retirement accounts but should also include life insurance policies and bank accounts as the beneficiary designation will supersede a divorce judgment or other instrument such as a will or trust in most cases. This is why you should have a post-divorce meeting with your family law attorney to review your judgment and determine what next steps you need to take in an atmosphere that is likely calmer and less emotional than the period leading up to your divorce becoming final.

If you have questions about how to protect your financial future, contact The Reape-Rickett Law Firm at (888) 846-6166 or Contact Us Here to speak with an experienced family law attorney. Our lawyers can help you navigate the post-judgment process and protect your rights.