My ex's family are very wealthy, and they hate my guts. They have taken total control of his estate. I believe that given the opportunity, my ex mother-in-law would contest anything coming to me. She even told lies about me at the funeral when I was just a few feet away.
What do I need to do now? Should I wait to see if the company holding the 401(k) retirement account finds me? I now have a different last name and address, but my Social Security number matches my newly married name and new address.
I do not know the name of the 401(k) company any longer, as I threw the papers out post-divorce thinking I did not need them anymore. Nor do you think a 40 year-old will be dying anytime soon. I am afraid to call my ex's employer because his father also works for them and word will get around. They will turn this into something awful. But I truly could use the funds since I'm also recently unemployed. --MV via email
A: Wow. This sounds like a combination of classic soap opera and modern reality show!
Let's start by eliminating everything that's highly dramatic, but legally irrelevant.
Your former in-laws' great wealth and intense dislike of you, your former mother-in-law's probable desire to rob you of an inheritance, the fact that your former father-in-law works for the same company as your ex, your recent unemployment and need for the money -- none of this has any bearing on your legal situation.
There would be nothing inappropriate or unseemly about your calling or writing to your ex-husband's employer and asking if you are the designated beneficiary on his 401(k) account.
But it isn't necessary. Based on what you say, all you need to do is sit tight. If you're still listed as your ex-husband's designated 401(k) beneficiary, your Social Security number is all the plan administrator will need to find you.
Here are the facts that are legally relevant:
1. Your ex-husband didn't remarry. If he had remarried, his new wife would be legally entitled to be his 401(k) beneficiary.
What happens when a 401(k) plan participant remarries, but his beneficiary designation form still lists his ex-wife? "Then the beneficiary designation form is canceled, and the participant's account is paid to his current wife," says Robyn Credico, an employee benefits expert at Towers Watson in New York City.
But if your ex was unmarried and you're still listed as his beneficiary, you are entitled to the account. This would be true even if his death had been accidental and had left his live-in girlfriend emotionally and financially devastated.
That's a cautionary note for others, to put it mildly! Many people who are divorced don't get around to changing their retirement account paperwork, especially on accounts still sitting in a former employer's plan; like you, they don't think a 40 year-old can die anytime soon. If you're divorced and living with a new partner, don't assume that he or she will automatically inherit your retirement account. Keep your beneficiary designations up to date!! (And keep your divorce papers. That's what safe deposit boxes are for.)
2. A 401(k) plan designation is not subject to legal challenge by the decedent's parents.
From what you say, it sounds as if your ex had no will. When you die without a will, the state's intestacy law dictates who gets your estate -- and in many states, when you die unmarried and childless, the law says your estate goes to your parents.
But the intestacy law applies only to assets that would have passed through your will if you'd had one. It doesn't apply to assets that pass 'by operation of law' -- i.e., assets that have designated beneficiaries or are jointly owned with right of survivorship.
In other words, even if your former in-laws have inherited their son's estate and all his personal belongings, they can't contest his disposition of his 401(k) account, his life insurance policy, his 'in-trust-for' bank account, or anything that he owned jointly with right of survivorship with another person who survives him.
P.S. Yours is the second question I've received in the past four years about the distribution of a 401(k) account whose owner may have been murdered. (See my earlier post 'Police Investigate Mom's Death'.)
Please send your questions to Lynn@LynnBrennersFamilyFinance.com. I'm sorry I can't respond personally to every email. Questions are addressed only online.
(c) Lynn Brenner, All Rights Reserved.