• 14
  • June
    2011

An important aspect of estate planning is maintaining accurate records of all of your accounts and to update your beneficiaries annually. Anytime there is a major change in circumstances, it is important to make sure that your estate plan accurately reflects your desires.

Divorce is an example of a time when one should consider changing the designated beneficiaries on his or her accounts. A divorce decree may or may not address death benefits from retirement accounts or other accounts that may become payable upon your death. As a result, it is important to keep these accounts up to date to reflect your desires close in time to when you pass on. This way you can be assured that your wishes are carried out upon your death.

This issue recently arose in Florida. The case went through the Florida court system where the courts disagreed with one another on the proper treatment of the intended beneficiary on a deferred compensation account.

The Florida Supreme Court has finally decided that a designated beneficiary on a deferred compensation account should receive the funds when a divorce settlement does not specifically designate a beneficiary.

The case stems from a dispute between a deceased man's daughter and his ex-wife.

According to a 2009 divorce settlement, the husband was allowed to keep all of his retirement accounts, including his deferred compensation account from Miami-Dade County. The ex-husband's deferred compensation account designated his ex-wife as the beneficiary to the fund upon his death.

Approximately one and a half years after the divorce was finalized, the husband died. He had not changed the designation of his beneficiary from his ex-wife. As a result, she claims that she is entitled to the fund amounts. However, his daughter argued that because the deferred compensation account was not awarded to the ex-wife during the divorce, the funds in the account should pass to his estate, of which his daughter is the beneficiary.

The Florida Supreme Court disagreed and found that according to the divorce agreement, the husband was granted full ownership of his deferred compensation fund account. As the owner of the account, he had every right to designate the beneficiary of his choosing and was not obligated to either maintain or change the beneficiary. As a result, the court held that absent a specific designation in the divorce decree providing who is to receive deaths, the named beneficiary, his ex-wife, should be entitled to collect the funds.

Source: Leagle.com, "Crawford v. Barker" 9 June 2011