Do spouses who are separated, but not divorced, have to worry about losing their beneficiary status under life insurance policies or pension plans of the other spouse?
Generally, the named beneficiary under life insurance or annuity contracts can be changed by direction of the owner of the policy without notice to the beneficiary. Most all private employer sponsored retirement plans are subject to federal law that requires married employees to name their spouses beneficiary, and this cannot be changed without written spousal consent witnessed by a retirement plan official or signed before a notary public. These plans are “qualified” under the Internal Revenue Code giving the employers a tax deduction for contributions made on behalf of the employee. Some executive plans that are not qualified for tax deduction by the employer are not subject to this rule and beneficiary interests, if any, could be changed without notice. Most typically, these non-qualified executive plans are available only to corporate offices or other highly compensated
corporate employees. Importantly, State and municipal government plans, covering tens of thousands of state and local government employees, are not subject to the federal law that requires spousal beneficiary designation. Under these government plans, the employee can remove his or her spouse as beneficiary with no notice to that spouse. In these cases, court action is required to obtain an order of court restricting changes in beneficiary designation. There have been cases where a change in beneficiary designation under a state or local government plan has made followed by the employee’s unexpected death, leaving the pension interest to pass to persons other than the surviving spouse. What has happened before will happen again.
In this highly technical area, separated spouses should consult an attorney early.