It is very common for a New Jersey Divorce Settlement Agreement to provide that one spouse waives his/her right to the other spouse’s Retirement Plan, such as a 401K Plan.
Most of the time, however, the spouse remains the named beneficiary of the Retirement Plan until then, because neither party is supposed to change any beneficiaries during a divorce case.
Therefore, it is absolutely essential that, as soon as your New Jersey Divorce Settlement Agreement is final, you go ahead and change the beneficiary – – that is, unless you do not mind your retirement benefits being paid to your ex-spouse after your divorce despite the waiver in the Settlement Agreement.
In 2009, the United States Supreme Court concluded that the Estate of a husband whose wife had agreed to waive her interest in his Pension when they got divorced, but who later died without changing the beneficiary, could not force the Pension Plan Administrator to pay the Pension benefits to the Estate!
On March 20, 2012, however, the Estate of a New Jersey resident in a similar case was able to convince the United States Court of Appeals to allow the Estate to sue the ex-wife to enforce her waiver, after she received the disputed retirement plan proceeds.
Although this case provides a possible remedy for correcting the husband’s mistake, it came only after years of costly litigation. All that could have been avoided if the mistake had not happened in the first place.
At the end of each divorce case, Salvaggio Law Group LLC takes the time to remind clients of the things they need to do. This “extra step” can provide clients with tremendous value and save a lot of money and heartache in the future.
If you believe that you may be able to benefit from an “audit” of your divorce settlement, including suggestions about any action which you may be able to take, call us at (973) 455-1220 or fill out the Contact Form on our website.