While the divorce rate has seen a slight decline in recent years, almost half of those who marry still face the prospect of divorce. When a marriage ends in Ohio, the couple divide the assets and are free to continue their respective lives as newly single individuals without legal ties to each other — except where the issue of federal retirement accounts might be concerned. Failure to address beneficiary designations can have unintended consequences following a divorce.
When a person starts a new job and signs up for an employer-provided 401(k) plan, one is asked to designate a beneficiary. The beneficiary is typically one’s spouse. If the employee predeceases the spouse, the proceeds of the account will transfer to the beneficiary. In the event of a divorce, the owner of the account must designate a new beneficiary, or the ex-spouse could still receive the proceeds.
Employer-sponsored retirement programs are typically protected by federal law and are governed by the Employee Retirement Income Security Act (ERISA). The only way to ensure that one’s wishes following a divorce will be successfully carried out is to change the designated beneficiary on those accounts. Failure to change the beneficiary on those accounts could result in an ex-spouse receiving the proceeds, even if a significant amount of time has passed.
Property and asset division in divorce can be complex and time-consuming. It is possible to overlook necessary changes that may then be forgotten. A person in Ohio who is contemplating divorce might benefit from consulting with an experienced family law attorney. A lawyer can help review all of one’s financial and material assets, and help to ensure that all of the bases are covered in arriving at a fair and equitable settlement.