Retire Plans and Community Property

Question 0

T or F In California , as in most other community property states, a married person must name their spouse as beneficiary.

Answer 0

True

However, money contributed to the account prior to marriage is separate property.

Question 1

T or F - The beneficiary designation on an retirement account determines who receives the assets regardless of what is in the decadent’s will or trust.

Answer 1

True - Beneficiary designation function by operation of law.

Question 2

What special rules apply to spousal rights and qualified plans?

Answer 2

Spouses are entitled to inherit all the assets in a quailed plan, unless they sign a waiver. The waiver must be witnessed and notarized. It should if possible be a special form for this purpose provided by the employer or plan administrator.

Note that a prenup can be used in lieu of a waiver. Also, only a spouse and not a “soon to be bride” can waive spousal rights.

Question 3

What is one exception to the rule that beneficiary designations control who inherits a retirement plan?

Answer 3

Spousal rights. The spouse must be listed as the primary beneficiary. However, even if no one is listed as primary beneficiary, or someone other than the spouse listed, by law the spouse will has full rights, and will be treated as the true beneficiary.