401(k) accounts are among the few non-probate assets where beneficiaries must be directly named on the account rather than through other estate planning documents. Naming a beneficiary is extremely important, but there are also some rules to be aware of. Here’s what you should know about 401(k) beneficiary rules based on marital status.

Single Account Holders

If you are not married, it’s pretty straight forward. You may name anyone you wish. The beneficiary need not be tied to anything else within your estate plan. Just be careful about naming minors as they cannot receive assets directly. The courts will end up naming a person to manage the funds until the beneficiary turns 18 years of age.

Married Account Holders

If you are married, by law, your spouse must be named as the beneficiary. If you enter someone else, marital laws will take precedent and your spouse will receive the asset anyway. The only way around this is to get your spouse to sign a waiver. Only then can you name another, non-spouse, beneficiary. This is true whether the 401(k) account existed before or after marriage.

Unusual Circumstances

Now let’s cover some unusual circumstances, such as prenuptial agreements, separation, divorce, and re-marriage.
Prenuptial Agreements: Even if your prenuptial agreement indicates that your spouse is not entitled to your 401(k), you should still obtain a signed waiver.
Separations – Although you and your spouse may be separated, until you are legally divorced, yoru spouse must still be the beneficiary of your account.
Divorce – Upon divorce, you must change the beneficiary listed on your account. Otherwise, your ex-spouse will receive your 401(k) funds upon your death as the named beneficiary.
Re-marriage – Should you get remarried, your new spouse is legally the beneficiary. If you prefer to have a child or other family member listed, you must obtain a signed waiver from your new spouse. This is true even if the account existed before your marriage with an alternate beneficiary.

401(k) Beneficiary Rules Based on Marital Status

As you can see, marital status is extremely important. Understanding 401(k) beneficiary rules based on marital status will help you take the necessary steps should you wish to name someone other than your spouse. For more guidance on this and other non-probate assets, schedule a consultation with our Massachusetts Estate Planning Attorneys.