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Reason # 10 For Having an Estate Plan: Your Ex-Wife Hopes You Forgot to Amend Your 401(k) Plan

Divorce is not easy.  I have seen families erupt from this process. Even when both sides agree that divorce is the best option, it is a difficult process that takes a toll on everyone involved, even the lawyers.  That said, I think after the divorce is over most people go into “don’t look back mode.” They don’t even want to think about their former spouse.  Unfortunately, the failure to review beneficiary designations on critical documents such as life insurance policies and retirement accounts may result in your money going to those whom you do not want to receive anything from your estate.

Time and time again, clients come to me asking me to do their wills and after my consultation, I learn of former marriages, step-children, children born-out-of-wedlock and so on.  Most of the time, the client has life insurance, retirement plans and other accounts that name their former spouses as beneficiaries.  This is usually the case if the client has worked for the same entity for decades and completed their life insurance paperwork a long time ago.  Or, if the client has several policies and retirement plans and forgets about those that may have named a former spouse. 

Here is the problem: life insurance and retirement plans cannot be amended or trumped by a will.  Income that is derived from these two sources are non-probate assets and if they are contested there is nothing a judge can do to change them.  In some states there is statutory law that annuls a beneficiary designation on any contract where the death benefit would go to an ex-spouse.  However, on June 3, 2013 in Hillman vs. Maretta the U.S. Supreme Court ruled that a Virginia statute was pre-empted by federal law as it relates to federal retirement plans and federal life insurance plans.  This ruling means that no state law can annul such designations on the contracts of federal government employees.

What does this mean for you?  Always, always, always review your life insurance, 401K plans, IRAs and other accounts with designations after you marry and/or divorce.  It will give you assurance that when you pass away, your assets are going to the ones you wish to receive them.

For advice on your estate planning needs contact The Ford Law Firm, PLLC at (202) 507-6313 or send an email to attorney Yaida Ford at