The Beneficiary Form Trumps All Other Documents

The Beneficiary Form Trumps All Other Documents

In a ruling on January 26, 2009, on Plan Beneficiary Form in the case of Kennedy vs. Dupont Savings and Investment Plan, the U.S. Supreme Court unanimously ruled that William Kennedy's ex-spouse would receive his $402,000 retirement plan because she was the named beneficiary. Mr. Kennedy died in 2001. Under the divorce decree of 1994, his ex-spouse waived her rights to any benefits from his retirement plan. Mr. Kennedy wanted the proceeds to be paid to his daughter.


So what could go wrong? Simple, Mr. Kennedy failed to change the beneficiary form. Mr. Kennedy believed because his ex spouse waived her rights in the divorce decree, he did not need to do anything else. You might ask, why didn't the attorney who handled Mr. Kennedy's divorce advise him to make the appropriate change on his retirement plan's beneficiary form by naming his daughter as primary beneficiary?


The answer is simple, like Mr. Kennedy, his attorney believed that because the former Mrs. Kennedy signed the divorce papers, forfeiting any rights to Mr. Kennedy's retirement plan, nothing more needed to be done. This was a $402,000 mistake.


The moral of the story? The beneficiary form is the single most important document in the estate plan. It trumps everything, regardless of what a will, trust, divorce decree or any other signed documents might say! Here is a list of what to look for to make sure your beneficiary document will get the job done


1. Do you have a copy?

2. Does it match the copy the Custodian has on file?

3. Does it address Simultaneous Death?

4. Are there multiple primary contingent beneficiaries

5. Does it automatically establish Separate Accounts? 

6. Does it allow for the restriction of a beneficiary? 

7. Does it re-direct the proceeds if you beneficiary predeceases you?

8. Does it address beneficiaries under the age of 18?

9. Is it up-to-date? 


If it has been a year or longer since the last time your beneficiary forms reviewed, it is time to revisit now.

A beneficiary check-up will help you determine whether your beneficiary documents are up-to-date and accomplish what you want done with your IRAs and other retirement accounts. This simple service will ensure that your family will not have to endure the delay and expense of probate and that the balance of your IRAs and other accounts will go to your intended heirs.

Older post Newer post

Leave a comment

Please note, comments must be approved before they are published