Retirement & Financial Planning Report

As part of your financial planning, check all beneficiary designations regularly. Failure to do so can penalize your heirs.

Earlier this year, the Supreme Court ruled in a case where a deceased worker’s retirement benefits were paid to his ex-wife, whom he had named as the beneficiary. The divorce decree stated that the ex-wife gave up any interest in the account but the employee did not change his beneficiary designation before his death.

Although the decedent’s estate sued for those benefits, the ex-wife kept them. According to the Court, the plan administrator was required to follow the terms of the plan and pay the named beneficiary. Otherwise, plan administrators would have a huge paperwork burden to determine who gets paid.

This ruling is far-reaching, applying to all retirement plans, life insurance, and other assets with a named beneficiary. So you should make sure you have the right names on all beneficiary designations.