Importance of Beneficiary Designation

Estate planning is not just about wills, trusts and powers of attorney.  Good estate planning involves an evaluation of your beneficiary designations for retirement accounts and insurance policies to ensure that there are no unintended results.  The Virginia Supreme Court recently held that a Virginia law cannot override a federal employee’s decision to make his ex wife, not his current wife, his beneficiary in a federal insurance program.

The Decedent made his wife the beneficiary of his Federal Employees’ Group Life Insurance Policy before their divorce and his remarriage.  He never changed his beneficiary designation after his divorce.  Even though there is a Virginia law (similar to California law) that revokes a beneficiary designation to a former spouse in this situation, the Court held that the Virginla law revoking the beneficiary designation was pre-empted by the federal law stating that the named beneficiary got the money.  Clearly the Decedent would have wanted to provide for his current spouse, but neglect of the beneficiary designated assets in his estate planning led to an unintended (and probably very unwanted) result.