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In my 30 years of practice, I have seen all kinds of post-nuptial agreements.   In many cases, either the clients believe that this is a way to save money or think that because they are getting along, they can do much of the legal work themselves, and all will work out in the end.   Again and again, this can prove to be a huge mistake, especially with retirement assets.

I recently handled a case for the surviving spouse of a university professor. The decedent and his wife had been married for over thirty years and had built up substantial retirement assets in the process. When he tragically died, his wife went about the process of winding up his estate. One day I received a frantic phone call suggesting a huge problem. Unbeknownst to her spouse, the decedent had never changed the beneficiary designation on his retirement accounts from the original date he began his employment in the 1970s.

Prior to his marriage to his surviving spouse, the decedent had been previously married in the mid-70s for several years. It was during this time that he began his employment with the university and commenced his retirement account. He and his former wife were divorced after several years of marriage, and the decedent remarried several years thereafter, no one thinking about the fact that the retirement account had never been divided in the divorce and that the decedent had never changed the beneficiary designation. When the surviving spouse sought to receive the money from the retirement plan administrator, she was told she could not receive the monies because she was not the beneficiary. She naturally thought she would receive the monies because she was beneficiary under his Will, but here was the trap for the unwary.   In the case of ERISA-approved plans, the designated beneficiary inherits the assets, even if the will says otherwise.   There have been a number of court cases that have challenged this view, largely without success.

Fortunately for my client, the previous spouse was not litigious, had a good sense of fairness, and was willing to work with me to fix the problem. Otherwise, we would have had to file suit. I had developed a reasonably good legal theory under which we could have recovered these monies for my client, but it would have been costly and, as always the case with court, somewhat unpredictable. Almost one-half million dollars was at stake. After minimal expense, we were able to get the decedent the money.

The moral of the story is, of course, that parties should always hire a lawyer experienced in domestic matters in the event of a divorce.   It is likely that this issue could have been caught much earlier if that had occurred. The retirement account would have been divided at the time of the divorce, and the beneficiary designation would have been altered for the benefit of the surviving spouse.

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