Who gets the $$$ in your retirement accounts when you die? The answer may surprise you.

[Editor]

What do you mean his ex-wife gets his 401(k)?! The will says right here that I get it!

Your Last Will & Testament is the final word in specifying exactly who gets your stuff after you die, right? Nope, not quite. Retirement accounts all have the ability to have one or more beneficiaries attached to them. The beneficiary designation trumps your will every time, according to this estate planner.




Key Takeaways from the Video:

• The beneficiary designation trumps your will every time, even if the will was created at a later date
• Not a good idea to specify a minor as a beneficiary, can create a real mess
• You can specify a Trust as the beneficiary. But, you must create the trust outside of this
• Can't specify specific amounts in the beneficiary designation, only percentages
• You can name your estate as the beneficiary, but this has negative income tax repercussions

A few more articles on this topic:

Beneficiary Designation vs Will - What You Need to Know | Trust & Will

When it comes to planning your estate, there are two terms you need to be 100% clear on: beneficiary designation vs. will. Trust & Will breaks them down.

trustandwill.com

Does a Will Override a Beneficiary? - Policygenius

A beneficiary designation will trump the terms of a will if there is a discrepancy between the two and you name someone different to receive an asset.

www.policygenius.com

Life Insurance policies appear to be addressed in a similar manner:

LegalZoom: Start Your Business, Form Your LLC or INC

Let LegalZoom help you start your business. Whether you need to form an LLC or incorporate, LegalZoom can help.

info.legalzoom.com

IMPORTANT: This is not legal advice! Consult with an attorney or professional before making any decisions.

 

[PeoplesElbow]

A friend of mine died and never updated his paperwork when he got remarried. Poor wife did not get his 401k.

 

[PrchJrkr]

A friend of mine died and never updated his paperwork when he got remarried. Poor wife did not get his 401k.

So, what happened to it?

 

[Clem72]

A friend of mine died and never updated his paperwork when he got remarried. Poor wife did not get his 401k.

Sounds like bullshite to me. Doesn't matter who you're signed beneficiary is, If you are married you cannot legally cut your spouse out of a 401k unless they explicitly agree. Not with a pre-existing beneficiary, not with a new beneficiary, not with a prenup.

A special rule applies to 401(k) plans and other "qualified plans" governed by federal law: Your spouse is entitled to inherit all the money in the account unless he or she signs a written waiver, consenting to your choice of another beneficiary. It's not enough just to name someone else on the beneficiary form that your employer gives you.

 

[PeoplesElbow]

Sounds like bullshite to me. Doesn't matter who you're signed beneficiary is, If you are married you cannot legally cut your spouse out of a 401k unless they explicitly agree. Not with a pre-existing beneficiary, not with a new beneficiary, not with a prenup.

Maybe it was the insurance

 

[PeoplesElbow]

So, what happened to it?

She didn't say, guessing the ex, there were also adult kids involved.

 

[RoseRed]

Funny this came out today. I just double checked my beneficiaries yesterday. Sister will have a good nest egg in my demise.

 

[frequentflier]

My husband and I went to a retirement seminar Tuesday evening and have an appt with a financial advisor next week to make sure we have all of our ducks in a row. Our wills need to be upgraded as well. Neither of us have children and we always struggle with beneficiaries.

 

[somdadmin]

Sounds like bullshite to me. Doesn't matter who you're signed beneficiary is, If you are married you cannot legally cut your spouse out of a 401k unless they explicitly agree. Not with a pre-existing beneficiary, not with a new beneficiary, not with a prenup.

A 401K - YES, an IRA - NO:

When choosing a beneficiary for a retirement plan, it is important to understand how your spouse will be treated under the plan. Surviving spouses are treated differently under 401(k)s and individual retirement accounts (IRAs). While a 401(k) provides protections for a surviving spouse, an IRA does not.

Do Surviving Spouses Have a Right to a 401(k) or an IRA?

Learn the basics on Estate Planning, Retirement Planning in e... https://www.elderlawanswers.com/do-surviving-spouses-have-a-right-to-a-401k-or-an-ira-8831

www.elderlawanswers.com

I don't recall the attorney in the original video pointing this out. I will have to rewatch and clarify in the OP. Thanks for pointing this out.

 

[Editor]

My husband and I went to a retirement seminar Tuesday evening and have an appt with a financial advisor next week to make sure we have all of our ducks in a row. Our wills need to be upgraded as well. Neither of us have children and we always struggle with beneficiaries.

Just had a senior family member pass. His will was out of date and named his siblings, both of whom have passed. So, now the court becomes involved and the attorney told me that this is going to take a year to come to conclusion. Who knows how much attorney fees are going to eat up.

 

[PrchJrkr]

My husband and I went to a retirement seminar Tuesday evening and have an appt with a financial advisor next week to make sure we have all of our ducks in a row. Our wills need to be upgraded as well. Neither of us have children and we always struggle with beneficiaries.

PMed my info to make it easier on ya! YW!

 

[DaSDGuy]

Sounds like bullshite to me. Doesn't matter who you're signed beneficiary is, If you are married you cannot legally cut your spouse out of a 401k unless they explicitly agree. Not with a pre-existing beneficiary, not with a new beneficiary, not with a prenup.

A spouse is only entitled to 401k money placed into the account while you are married. If the account was created before your marriage and nothing was added during the marriage (happens a lot because people change jobs) the ex-spouse is entitled to nothing in that account.

 

[Clem72]

A spouse is only entitled to 401k money placed into the account while you are married. If the account was created before your marriage and nothing was added during the marriage (happens a lot because people change jobs) the ex-spouse is entitled to nothing in that account.

Did you not read who I was replying to? He said the guy's CURRENT WIFE WHEN HE DIED was cut out of the 401k when he died, which is not possible as I stated.

Even if there was an ex listed as the sole beneficiary, she would only be entitled to a split of what was contributed and earned during the marriage, his current wife would have been entitled to his portion of the account even if she was not listed as the beneficiary.

I may not be a lawyer, but I am an ******* who has been through more than one divorce with a 401k on the line.

 

[stgislander]

A QDRO is your friend.

 

[DaSDGuy]

Did you not read who I was replying to? He said the guy's CURRENT WIFE WHEN HE DIED was cut out of the 401k when he died, which is not possible as I stated.

Even if there was an ex listed as the sole beneficiary, she would only be entitled to a split of what was contributed and earned during the marriage, his current wife would have been entitled to his portion of the account even if she was not listed as the beneficiary.

I may not be a lawyer, but I am an *** who has been through more than one divorce with a 401k on the line.

Actually it is possible. 401k accounts are marital assets. If they got married AFTER he retired and AFTER the account was fully vested she can be excluded because the account would NOT be a marital asset.

 

[black dog]

Actually it is possible. 401k accounts are marital assets. If they got married AFTER he retired and AFTER the account was fully vested she can be excluded because the account would NOT be a marital asset.

I've been divorced twice and neither wife got any of my union pension or my 401.
Its all negotiating on who wants what if its discussed at all. Some should have had better attorneys.

 

[PeoplesElbow]

Did you not read who I was replying to? He said the guy's CURRENT WIFE WHEN HE DIED was cut out of the 401k when he died, which is not possible as I stated.

Even if there was an ex listed as the sole beneficiary, she would only be entitled to a split of what was contributed and earned during the marriage, his current wife would have been entitled to his portion of the account even if she was not listed as the beneficiary.

I may not be a lawyer, but I am an *** who has been through more than one divorce with a 401k on the line.

He had only been married for the last 5 years of his life and retired from the military before he met her.

 

[Sneakers]

Its all negotiating

That^. It was written into our sep agreement and made part of the divorce decree, my bank and retirement accounts were mine and hers were hers.

 

[stgislander]

That^. It was written into our sep agreement and made part of the divorce decree, my bank and retirement accounts were mine and hers were hers.

Mine was like that, but Merrill-Lynch would not allow me to rollover an Employee SEP IRA to a Traditional IRA without a QDRO in place stating that she got zippy. $300 later I was allowed to rollover my IRA.

 

[Clem72]

He had only been married for the last 5 years of his life and retired from the military before he met her.

So you're saying she signed a pre-nup? Even if she did, she still has to sign-off on not having interest in the 401k, it's not automatic. If he had a bank account that she wasn't on, would this go to the ex-wife? If their house was in his name only (or they had a rental property) would that go to the ex-wife? Why do you believe the ex-wife would get the entire nut rather than the portion she had already agreed upon during their divorce negotiations? When you die, your current assets go to your spouse unless you have made very specific prior legal arrangements. They don't go to an ex, even if that ex already owns a part. A good example, I had a relative recently pass and had explicitly willed all of his belongings to his children. His ex was still listed as part owner on their rental properties (they continued to run that as a business after they divorced). She did not suddenly own all of those properties outright, his children now own his half. If he had remarried and had no will, I expect his new wife would own his half.