You may have missed this while the country was undergoing a financial crisis. We’ll file this under “Retirement” since every retirement account must have a named beneficiary.
The Supreme Court of the United States ruled UNANIMOUSLY that Liv Kennedy, ex-spouse of William Kennedy, was entitled to receive payment of his retirement account money – despite their divorce. You can Google the case name, “Kennedy v. Plan Administrator for DuPont Savings” to learn more.
You can also read the actual Supreme Court decision here – this isn’t long, but it isn’t an easy read either. The legal language will discourage most people from reading all of the decision. The case was decided on a simple basis. Liv’s name was recorded as the beneficiary of William’s retirement account. This should be a big wake-up call to everyone who has a retirement plan of any kind.
Here are the basic facts of this case:
- The couple, William and Liv Kennedy were married for a time
- During the marriage, William Kennedy named Liv Kennedy as sole beneficiary of his retirement plan at Dupont, where he was employed
- Later, the couple was divorced and in the divorce proceedings, Liv waived any interest she had in his retirement Savings and Investment Plan (SIP) at Dupont
- Unfortunately, William never changed his beneficiary designation on his retirement account after the divorce was final – so Liv’s name remained recorded until he died
- Later, William died
- William’s daughter served as executrix of the estate asked and Dupont to release the retirement money to the estate
- Instead, the Plan Administrator for Dupont distributed the money to the named beneficiary, ex-spouse Liv Kennedy!
- Lawsuit!
- The case worked its way to the Supreme Court before being decided unanimously in favor of the ex-spouse, who was named on William Kennedy’s retirement plan documents. Don’t miss the unanimously part. All the Justices sided with Liv
- Daughter Kari Kennedy lost $402,000 as an inheritance because her dad never updated the form after the divorce – even though that was his intent
- Intent doesn’t count, until it is expressed in ink
Moral of the story: Don’t assume anything. Make sure you have consulted with an attorney about your estate plans. UPDATE THE BENEFICIARY of every retirement plan to match who you want to receive the money when you die.
Investment Management and Beneficiaries?
You may wonder why a firm focused on great investment management is posting an article about beneficiary designations. Here’s why -
Isn’t investment management about growing and protecting your money? Absolutely. To grow and protect your money means you have to control your money. Naming a beneficiary is an important part of growing and protecting your money – perhaps the ultimate way to protect your money.
Clients of RLC can update their beneficiary designation at any time by filling out a Charles Schwab beneficiary form and sending it to our Dallas, TX office. You can find the forms here: Charles Schwab Account Forms.
Almost all of our clients across the United States of America have retirement plans – either pension plans, 401k plans, SEP plans, IRAs, etc. Each of these retirement plans has a named beneficiary. It is just too easy to fill out that form one time and never look at it again and update it as your life changes. Please make sure you specifically name the person or persons you want to receive the money when you die. Better to now so there are not any surprises when your family is already under stress.
