A:

Even when assets are divided following a divorce, in many cases, former spouses and heirs engage the services of attorneys and the courts to determine the beneficiaries of the retirement-plan assets of a deceased retirement account owner. This occurs when the deceased fails to update his or her beneficiary designation after a divorce or remarriage. Individuals who are recently divorced can save their beneficiaries the stress and legal fight by properly updating their beneficiary designations.

In your case, because the account holder has already died, the outcome may depend on the provisions in the plan document. Some documents provide that a beneficiary designation is revoked upon divorce. Some state laws include similar provisions.

If the account is a qualified plan, such as a profit sharing, money purchase, or defined benefit plan, the surviving spouse is usually the beneficiary by default.

To be sure, check with the custodian if it's an IRA, or check with the plan administrator it it's a qualified plan.

For related reading, see Getting A Divorce? Understand The Rules Of Dividing Plan Assets.

This question was answered by Denise Appleby.

RELATED FAQS
  1. If an individual still has his or her former spouse as the beneficiary of an IRA, ...

    It depends. Generally, divorce does not effectively change a beneficiary designation unless the divorce decree makes a stipulation ... Read Answer >>
  2. Is my husband's ex-spouse entitled to receive my spouse's retirement benefits?

    The rules vary among retirement benefits. In some cases, because you are the current spouse, you will be treated as the beneficiary ... Read Answer >>
  3. My uncle died recently. He designated my mother and father as his beneficiaries in ...

    It depends. If the retirement plan is a qualified plan, then the plan administrator would refer to the plan document to determine ... Read Answer >>
  4. Can an IRA beneficiary roll the IRA over into another account and designate another ...

    It depends on the provision of the IRA plan document. Some (though very few) do not allow the designation of successor beneficiaries. ... Read Answer >>
  5. If I pass away, will my retirement plan go to my spouse tax free?

    If your spouse is the designated beneficiary of your retirement plan, the assets will pass to him or her tax free. The general ... Read Answer >>
  6. How do I change my contingent beneficiary?

    Learn what life insurance companies and retirement plan accounts require from you to change your contingent beneficiary designations. Read Answer >>
Related Articles
  1. Financial Advisors

    Add Beneficiary Designations For Divorcing Clients

    Failing to update beneficiary designations following a divorce can cost your loved ones dearly.
  2. Options & Futures

    An Estate Planning Must: Update Your Beneficiaries

    Life changes make it time to rewrite your plan's designations.
  3. Retirement

    Mistakes In Designating A Retirement Beneficiary

    Make sure your beneficiary designations not only reflect your intentions but also meet the requirements to be effective.
  4. Financial Advisors

    How to Handle Client Beneficiary Designations

    Beneficiary designations are a critical financial planning step that can be easily overlooked. Here's how to ensure they are properly done.
  5. Retirement

    Who Gets Your Retirement Accounts?

    It’s important to review your financial beneficiary designations every year or two, or whenever you experience a major life change, like a divorce.
  6. Insurance

    Who is a Beneficiary?

    A beneficiary is a person or entity that receives funds, assets, property or other benefits from a trust, will, or life insurance policy.
  7. Investing

    How to Protect Your Retirement After a Divorce

    Divorce is never fun, but knowing the rules and anticipating the impact of retirement plan division and pension payouts can make things easier.
  8. Personal Finance

    Divorce Planning Checklist: What You Need to Know

    Divorce can be costly and hard if you don't plan for it. Making sure you have all your ducks in order will go a long way in easing the pain.
  9. Stock Analysis

    Trusts: Prevent Beneficiary Designation Mishaps

    Wills and revocable trusts are the cornerstone of estate planning, learn how you may spend considerable time and money maintaining these documents.
  10. Home & Auto

    Why Your Will Should Name Designated Beneficiaries

    Find out how to make the tough decisions when it comes to choosing who will receive your assets and how they will be paid out.
RELATED TERMS
  1. Absolute Beneficiary

    A designation of a beneficiary that can not be changed without ...
  2. Named Beneficiary

    This term refers to any beneficiary named in a will, a trust, ...
  3. Primary Beneficiary

    A beneficiary in a will, trust or insurance policy that is first ...
  4. Secondary Beneficiary

    A person or entity that inherits assets under a will, trust or ...
  5. Alternate Beneficiary

    In a will, an alternate beneficiary is usually named in case ...
  6. Institute For Divorce Financial Analysts - IDFA

    An organization committed to educating financial professionals ...
Trading Center