FAQ: If I Fail to Change My Beneficiary on My Life Insurance or Retirement Plan Post-Divorce, Is It Possible for My Former Spouse to Collect My Death Benefit?

ANSWER: Yes. Your ex-spouse may receive your insurance or retirement benefits — even if your Judgment of Divorce states otherwise.  To prevent this, you must take action immediately after your divorce to change your beneficiary and alternate payee designations.  Do not consider your divorce “Done” until you personally have made these important changes.

Retirement benefits, including, but not limited to, qualified stock bonus, pension, and profit sharing plans (including both defined benefit and defined contribution plans), 401(k) plans, and employee stock ownership plans (ESOP), as well as various life insurance policies provided by your employer may be covered by the Employee Retirement Income Security Act of 1974, commonly known as “ERISA.”  ERISA is a federal statute, which preempts the provisions of your state issued divorce decree. As a result, your divorce decree does not automatically change the beneficiary designations or alternate payee designations on retirement or life insurance plans, even when your decree states otherwise.  

After your divorce, it is your responsibility to ensure that your beneficiary or alternate payee designations are in compliance with your divorce decree. If a change is authorized, you must submit the proper forms to the administrator of the plan to change the designation of your former spouse to your new designated beneficiary.  Your failure to do so will result in the proceeds being paid to your former spouse upon your death, unless costly litigation is commenced by your estate and only under certain facts will your estate prevail to get the funds returned to your estate.

Under ERISA, the plan administrator has an absolute right to ignore the terms of your divorce decree and pay the named beneficiary.  Act now, review your divorce decree and see if you may change the beneficiary on your life insurance and retirement plan in compliance with your divorce decree.

PLEASE NOTE: This blog is not intended to constitute legal advice.  We do not recommend making important decisions of the type addressed in this article without specific legal advice in advance.  We at Banfield Couling Law and Mediation are here to help navigate your legal matter at any stage of your divorce.