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Do I Get Ex’s 401(k) because I Was Named the Beneficiary?

ex-spouse as beneficiary
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My ex-husband passed away. However, I was named the beneficiary on his 401(k). Even though we are divorced, do I still have a right to it?

Whether an ex-named the beneficiary on their former spouse’s 401(k) will inherit may depend on the couple’s divorce agreement.

This type of question emphasizes how critical it is to update estate planning documents and beneficiary designations after a divorce.

Nj.com’s recent article entitled “Do I have a right to my ex-husband’s 401(k) plan?” says that this question also illustrates the importance of having a well-drafted and comprehensive divorce settlement agreement, one that details the rights and obligations of each spouse after divorce.

A comprehensive divorce agreement and timely modifications to wills and account beneficiary designations can eliminate any issues concerning the rights of a former spouse about the other’s retirement assets.

By operation of law, some states revoke a payable on death (POD) beneficiary designation of an ex-spouse. However, such a statute would only be controlling if no governing instrument addresses the asset in question.

If there’s a governing instrument, like a marital settlement agreement and a Qualified Domestic Relations Order (QDRO), that agreement will control that governing instrument’s terms.

A divorce decree or settlement agreement should specify the rights of each spouse to any retirement assets held by the other. If the decree or settlement agreement provides for one spouse’s interest in the other’s retirement asset, the death of the other spouse shouldn’t, by itself, extinguish that interest.

If the retirement asset is a 401(k), a QDRO would likely have been required post-divorce to secure the interest of the receiving former spouse. After this is prepared and filed with the court, the QDRO would be forwarded to the retirement account’s plan administrator for implementation and distribution to the former spouse.

However, if there’s no divorce decree, agreement, or QDRO confirming a former spouse’s interest in the other’s retirement asset, the former spouse would likely not be successful trying to claim a portion of that asset—even though they are the named beneficiary. That’s because there’d be no governing instrument vesting them with the right to receive all or a portion of the asset.

Reference: nj.com (Dec. 13, 2021) “Do I have a right to my ex-husband’s 401(k) plan?”