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rckaneb

Beneficiaries

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My friend's husband died 9/09 after a nine year illness while she was married to him and his caretaker. Before marrying her twelve years ago he set up and funded a 457b plan designating his brother as beneficiary. By oversight or design (she's not sure - plan was not discussed) he did not change designated beneficiaries before his death.

 

Question: As the surviving spouse living in California, a community property state, is she not entitled to at least half of the plan, if not all?

 

Thanks,

Richard

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Consulting with an employee benefits attorney may be recommended. For residents of a community property state such as California, a beneficiary designation of a 457(b) plan may be subject to challenge in some 457(b) plans if the spouse would consequently receive less than the share of the benefit attributable to community property. If the brother is a reasonable person, he should be asked to disclaim his share as the primary beneficiary of the 457 account. Unless there were other living primary or contingent beneficiaries named in the designation of beneficiary form, the widowed spouse should be entitled to the claim the 457(b) benefits. If the brother is unreasonable, have your friend contact the 457 plan administrator and/or the 457 provider and inform them that she would like to challenge the brother’s beneficiary claim. If the plan administrator or custom service representative is not helpful, she should insist on speaking with the 457 provider’s customer service manager or a tax attorney in the organization’s home office. If your friend is uncomfortable speaking with someone about this matter, sending a certified letter to the 457 plan administrator and/or the 457 provider may be just as effective.

 

Failure to change the designated beneficiary in a retirement account (457b, 403b, 401k, IRA, etc.) after a life changing event often results in unintended consequences. The 2009 U.S. Supreme Court case of Kennedy vs DuPont Savings and Investment Plan is a perfect example of why updating a beneficiary designation is so important. In this case, the Supreme Court agreed that the ex-wife be awarded all of her ex-husband’s retirement plan benefits despite the fact she waived all claims to the retirement benefits in their divorce decree.

 

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