As loved ones enter or leave your life, it’s important to update your beneficiary designation forms. This is particularly important when divorce occurs. The case of Estate of Kessinger vs. URL Pharma Inc., Third Circuit clearly demonstrates this.
In that case, William was married to Adele. When they got divorced, Adele signed a waiver agreement giving up her rights to any part of William’s 401(k) proceeds. Unfortunately, after the divorce, William forgot to remove Adele’s name from his 401(k) beneficiary designation form. When William died, both his estate and Adele claimed rights to his 401(k) money. The case went to court and the court ruled that the money should go to the person named on the beneficiary designation form. And, that was Adele.
William’s estate appealed this ruling, and the upper court reviewing the appeal determined that the estate could, in fact, sue Adele to enforce the waiver agreement. This was good news for the estate. However, if William had only remembered to change his 401(k) beneficiary designation, his estate would have avoided all the legal expenses and associated costs involved in going to court!
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