Named Spouse Beneficiary: What You Should Know About Marital Property in Divorce

by Blair Nicole PR, Marketing

After getting married, an individual may decide to change a named beneficiary on their accounts such as stocks and retirement accounts to their new spouse. In case of divorce, most accounts allow the initial account holder to change named beneficiary. It is advisable to request for divorce mediation in Utah. But before you do that, here are a few pension beneficiary rules you should keep in mind.

Temporary injunction

When a spouse files for divorce, the court issues a temporary injunction order. The order prevents anyone from changing named beneficiaries of specific accounts without a valid agreement.

However, the injunction doesn't apply in a pension account. Most pension beneficiary statutes have a particular timeframe after which you can't change your beneficiary. For instance, when you retire, you can't reverse your beneficiary designation.

Property Interest

There is no definite answer whether a spouse's pension is part of marital property. However, some lawyers argue that your beneficiary may have a marital property interest. It's hard to value the interest as property interest is considered as divestment and may not benefit the beneficiary. For instance, if a beneficiary dies before a pension-holder or if the account-holder lives beyond a particular age, the pension will not help the recipient.

Often, marital property is speculative. If a divorce case proceeds to hear stage, one spouse may argue in court that the property interest is uncertain and lacks any value. Also, they may ask for a beneficiary's share of marital property not to be reduced due to unpredictable future interest. The recipient may not get monetary value for the property.

A beneficiary may state that the pension-holder offered them a gift by designating them as the beneficiary to their property. Therefore, it is their property interest, and shouldn't be included when dividing debt and other marital property.

A CPA helps in examining the benefit and pension in divorce mediation in Utah. Also, you may have to pay an expert to estimate the value of speculative property interest. As a pension beneficiary, you can propose to make someone a recipient of their retirement to avoid a court battle.

Pension Rights

If a spouse earned pension during a marriage, it's treated as a joint asset. A typical divorce court may decide whether to divide pension assets and if you are entitled to survivor’s benefits. Often, you are eligible for a portion of a pension except in Tier I Railroad Retirement and Social Security benefits.

If the court divides pension between spouses, it's prudent to do so during the divorce when dividing other marital assets. An ordinary domestic relations order is a court order which allows a pension plan to pay a divorced spouse.

Often, retirement plans directly pay pension benefits to divorced partners provided the domestic relations order (DRO) meets specific requirements. In a private retirement plan, the DRO which satisfies these requirements is referred to as a qualified domestic relations order (QDRO). In both scenarios, a retirement plan can pay for an employee's life or after their demise. Different states have clear pension division rules. Also, your rights as a beneficiary depend on when you divorced.

Are you seeking divorce mediation in Utah? Wall & Wall Attorneys at Law is a prominent family law firm serving Salt Lake City. We have Spanish and English interpreters. We offer discounts to service members. Call us now via 801-441-238 for a free consultation.