IRA Beneficiary Designation in Favor of Former Spouse: Ky Supreme Court Published Opinion

RUTH ANN SADLER V. BARBARA LOIS VAN BUSKIRK

Husband died many years after his divorce, but despite his remarriage, he had not removed his former wife as the beneficiary of his IRA. In the parties’ marital settlement agreement they had agreed to make “no claim upon any interest owned by the other, now or in the future” of their Individual Retirement Accounts.

The court looks to the holdings made in Ping, Hughes and Napier and extends their precedent to the retirement account context. The Supreme Court holds a divorce alone does not give rise to a presumption an ex-spouse is removed as a beneficiary of a retirement account; however, parties have the power to divest an interest of a beneficiary by agreement. The agreement must be clear and unambiguous and a general waiver is not enough. In this case, the parties clearly and unambiguously agreed to assign the exclusive ownership of the IRA to husband. Therefore, the former wife has no beneficiary interest in the IRA.

Digested by Elizabeth M. Howell.