06/01/2011

Failure to change a plan beneficiary the right way can be costly to your heirs

A 401(k) plan provided that if a participant died, the account would go to the spouse unless the spouse agreed to waive his or her rights as a beneficiary.  A plan member designated his three adult children as beneficiaries after his first wife passed away.  He eventually remarried, but died six weeks later.  Both his kids and his spouse claimed the balance left in his 401(k) plan, and a district court awarded it to his wife because a spousal waiver was never executed (Cajun Industries v. Kidder, D.C., La.).

Source: The Kiplinger Tax Letter