The Divorce Decree Said She Gave Up the Money. The Supreme Court Said Otherwise.
Below the Fine Print • Estate and Digital Legacy Series
William Kennedy worked for DuPont for years. When he got married, he filled out a form naming his wife Liv as the beneficiary of his retirement savings. Standard procedure. Nobody thinks much about it at the time.
In 1994, William and Liv divorced. The divorce decree was explicit: Liv waived her interest in William’s pension benefits. It said so in plain language. Both parties signed it. The lawyers signed off. The marriage was over, and so, presumably, was Liv’s claim on William’s retirement account.
William never updated the beneficiary form.
He died in 2001. His daughter Kari, acting as executrix of his estate, contacted DuPont and asked for the retirement funds to be distributed to the estate. DuPont declined. The beneficiary designation form on file named Liv. DuPont paid her the balance. Approximately $400,000.
Kari sued. The case went to the Supreme Court of the United States. The Court ruled unanimously in favor of Liv. The divorce decree said she’d given up the money. The form said she hadn’t. The form won.
This is not an obscure edge case. Versions of it happen constantly.
Most people assume a will is the document that decides where their money goes. It isn’t, not entirely, and sometimes not at all.
Your 401k, your IRA, your life insurance policy, your pension if you have one, all of these pass to whoever is named on the beneficiary designation form you filled out when you enrolled. Not whoever is named in your will. Not whoever you told your family you wanted to have it. The form. Whatever you wrote on the form, possibly decades ago, possibly without thinking about it for more than thirty seconds.
A will can direct your bank account. It can direct your car. It can direct your furniture and the contents of your home and the specific items you want specific people to have. What it cannot do is override a beneficiary designation on a retirement account or life insurance policy. Federal law governs those accounts, and federal law says the form is the document that controls.
This surprises people. It surprised William Kennedy’s daughter. It surprises a lot of families at exactly the moment they can least afford surprises.
The law at the center of the Kennedy case is called ERISA, the Employee Retirement Income Security Act. It’s the federal statute governing most private employer retirement plans, and one of the things it does is establish that plan administrators must follow the beneficiary designation forms on file, period. A divorce decree that says an ex-spouse has waived their interest does not, under ERISA, change the designation. Neither does a will that names someone else. Neither does what you told your kids you wanted. The form controls.
There’s a mechanism called a Qualified Domestic Relations Order, a QDRO, that can redirect retirement plan proceeds during a divorce. If William and Liv’s attorneys had included a QDRO as part of the divorce settlement, the outcome might have been different. They didn’t. The divorce decree waiver wasn’t a QDRO. So when DuPont looked at what documents they were legally required to follow, they had one answer: the form from 1974.
The practical consequence of all of this is not complicated. It’s one task that takes about twenty minutes.
Go look at your beneficiary designation forms. Every retirement account you own. Every life insurance policy. Every account with a payable-on-death designation. Find out who is named as the primary beneficiary and who, if anyone, is named as the contingent beneficiary in case the primary dies before you do.
If what those forms say matches what you’d actually want, you’re done. If they don’t, update them. Most financial institutions let you do this online. It takes minutes.
The reason this matters is that the beneficiary form is not a document you fill out once and forget. It’s a legal document that will control what happens to potentially the largest assets you own. A retirement account built over thirty years of work can be directed away from the people you’d have wanted to have it by a form you signed at a different point in your life, when you were a different person, in different circumstances.
William Kennedy almost certainly intended for his daughter to receive his retirement savings. The divorce decree said his ex-wife had given up any claim to it. Neither of those things mattered to the outcome. What mattered was a form he filled out in 1974 and never updated.
Do it this week.
This essay draws on material from Do I Need a Will If I Don’t Have Much?, part of the Below the Fine Print series. The series covers estate planning, digital legacy, and the administrative realities most families encounter without warning. Available now on Kindle and direct PDF at belowthefineprint.substack.com
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