If you would like to name anyone other than your spouse as the beneficiary of your retirement account, your spouse must sign a waiver. And, if you live in a community property state such as Washington, your spouse must sign a prenuptial or marital agreement in addition.
Typically, we all name our spouses as the beneficiary of our retirement account. However, sometimes we may want to name another individual, our revocable living trust, or a trust for our spouse. In all these cases, the spouse must sign a waiver indicating that it’s okay for you to name someone (or something else, in the case of a trust.) The waiver is an ERISA law.
- If the spouse doesn’t sign the waiver, your spouse has a right to all of the retirement account assets upon your death.
- If you get married with an existing account and fail to have your new spouse sign the waiver within one year, your spouse has the right to all of the retirement account assets upon your death.
In community property states such as Washington, spouses are deemed to own one-half of retirement account assets that were set up and funded during the marriage. Therefore, at your death and unless there is a written agreement otherwise, your spouse has a right to community property assets, including your retirement assets. This is a Washington state law.
In addition, if you wish to name a minor as beneficiary of your retirement account, don’t. Instead, name a trust for the benefit of the minor.
Minors legally can’t inherit. If you name the minor, the court will have to be petitioned. The court will then name a guardian to oversee the funds on the minor’s behalf until the minor reaches the age of majority, age 18. This is also state law.
Guardianships require annual accounting to the court which continues to supervise the guardianship until funds are dispersed. This costs money and time. So, simply avoid the problem and don’t name a minor as the beneficiary of your retirement account.