1
00:00:00,040 --> 00:00:02,120
Hi, I'm Ed Slott and I'm Jeff Levine.

2
00:00:02,510 --> 00:00:06,119
And we're two guys who just love
to talk about retirement and taxes.

3
00:00:06,160 --> 00:00:10,039
Look, our mission is simple to educate
you, the saver, so that you can make

4
00:00:10,090 --> 00:00:14,170
better decisions because better decisions
on the whole lead to better outcomes.

5
00:00:14,210 --> 00:00:15,830
And here's how we're going to do that.

6
00:00:15,929 --> 00:00:20,040
Each week, Jeff and I will debate
the pros and the cons of a particular

7
00:00:20,040 --> 00:00:21,939
retirement strategy or topic.

8
00:00:22,300 --> 00:00:25,950
With the goal of helping you keep
more of your hard earned money.

9
00:00:26,030 --> 00:00:29,270
At the end of each debate, there's
going to be one clear winner.

10
00:00:29,520 --> 00:00:29,870
You!

11
00:00:30,230 --> 00:00:33,170
A more informed saver who can
hopefully apply the merits of

12
00:00:33,170 --> 00:00:36,280
each side of the debate to your
own personal situation to decide

13
00:00:36,290 --> 00:00:38,199
what's best for you and your family.

14
00:00:38,229 --> 00:00:39,159
So here we go!

15
00:00:39,180 --> 00:00:41,310
Welcome to the Great Retirement Debate!

16
00:00:42,960 --> 00:00:44,769
So Jeff, here's an interesting story.

17
00:00:44,790 --> 00:00:47,410
Actual tax court case, so that
should pique your interest.

18
00:00:47,430 --> 00:00:49,120
Alright, tell me, what's going on?

19
00:00:49,239 --> 00:00:53,910
Well, here's a guy who worked for a
company for many years, and he left his

20
00:00:54,379 --> 00:00:58,519
multi, well not multi million, one, one
point something million, so a million

21
00:00:58,519 --> 00:01:04,449
dollar plan, account balance, retirement
account balance, to his ex girlfriend.

22
00:01:04,459 --> 00:01:05,789
To his ex girlfriend?

23
00:01:05,859 --> 00:01:08,089
Yeah, now, you might say,
alright, you know, there might

24
00:01:08,089 --> 00:01:09,139
have been something there.

25
00:01:09,209 --> 00:01:09,229
Yeah.

26
00:01:09,875 --> 00:01:11,955
He broke up with her in 1989.

27
00:01:13,780 --> 00:01:14,890
It's a long time ago.

28
00:01:16,050 --> 00:01:17,550
A very long time ago.

29
00:01:17,550 --> 00:01:20,600
And in all those years, he
never changed his beneficiary.

30
00:01:20,600 --> 00:01:21,100
Never.

31
00:01:21,140 --> 00:01:24,100
Even though the company asked him to.

32
00:01:24,110 --> 00:01:27,669
As a matter of fact, it was so long
ago, in this case, they didn't have

33
00:01:27,669 --> 00:01:29,249
really fancy beneficiary forms.

34
00:01:29,249 --> 00:01:32,450
Yeah, I was going to ask whether he
chisel his beneficiary into stone tablets?

35
00:01:32,450 --> 00:01:33,079
Something like that.

36
00:01:33,080 --> 00:01:36,480
It was actually written on a card,
like an index card, a beneficiary form

37
00:01:36,480 --> 00:01:38,310
card the company had at that point.

38
00:01:38,710 --> 00:01:42,010
And they went, as they computerized
over the years, they sent him

39
00:01:42,010 --> 00:01:44,000
notification after notification.

40
00:01:44,000 --> 00:01:44,649
He just died.

41
00:01:44,670 --> 00:01:46,400
So we're talking about many years ago.

42
00:01:47,680 --> 00:01:49,870
Do you want to update
your beneficiary form?

43
00:01:49,870 --> 00:01:52,420
They said, because we're going
to a computerized format.

44
00:01:52,650 --> 00:01:53,564
And if you don't.

45
00:01:53,634 --> 00:01:58,225
Don't update it, we're going to assume
what you had on that handwritten card,

46
00:01:58,425 --> 00:02:00,425
that's your selection for beneficiary.

47
00:02:00,765 --> 00:02:03,164
And he never changed it, he never
changed it, he never changed it, well

48
00:02:03,164 --> 00:02:05,645
now he's dead and she gets the money.

49
00:02:06,015 --> 00:02:10,895
Now he died unmarried, so he
had no spouse and no children.

50
00:02:11,204 --> 00:02:12,985
So why is there a court case?

51
00:02:13,005 --> 00:02:16,565
Well, with a million dollars in a
retirement account, you know people

52
00:02:16,565 --> 00:02:17,575
are coming out of the woodwork.

53
00:02:17,575 --> 00:02:18,805
Somebody's going to be upset about that.

54
00:02:18,835 --> 00:02:19,935
His two brothers.

55
00:02:19,984 --> 00:02:20,254
Ah.

56
00:02:20,255 --> 00:02:20,289
Ah.

57
00:02:20,289 --> 00:02:20,324
Ah.

58
00:02:21,245 --> 00:02:25,285
And they said, no, this can't be what
he, what he broke up with her in 1989.

59
00:02:25,285 --> 00:02:27,285
She can't possibly get the money.

60
00:02:27,565 --> 00:02:30,485
The court says, yes, she gets the money.

61
00:02:30,705 --> 00:02:33,714
They want, now where it stands,
and who knows where it is, by

62
00:02:33,714 --> 00:02:36,864
the time you see this, uh, could
change a little, I don't think so.

63
00:02:37,095 --> 00:02:37,955
They want to appeal it.

64
00:02:38,390 --> 00:02:41,070
my position, my feeling, they will lose.

65
00:02:41,130 --> 00:02:42,520
They will lose every case.

66
00:02:42,750 --> 00:02:44,410
They even said that in this court case.

67
00:02:44,450 --> 00:02:47,370
He had every chance to
change his beneficiary.

68
00:02:47,539 --> 00:02:49,250
He opted not to do it.

69
00:02:49,280 --> 00:02:49,509
That's right.

70
00:02:49,510 --> 00:02:50,169
It was his money.

71
00:02:50,169 --> 00:02:51,439
He can choose to do what he wants.

72
00:02:51,440 --> 00:02:52,190
It's like that commercial.

73
00:02:52,190 --> 00:02:52,840
It's your money.

74
00:02:52,860 --> 00:02:54,859
Do with it what you want.

75
00:02:54,859 --> 00:02:55,219
Yeah.

76
00:02:55,575 --> 00:02:56,665
And that's what happened.

77
00:02:56,885 --> 00:03:01,015
And now, I saw, when I saw the
comments to the article, uh, Wall

78
00:03:01,015 --> 00:03:02,745
Street Journal ran an article on it.

79
00:03:02,995 --> 00:03:04,484
They had tons of comments.

80
00:03:04,644 --> 00:03:06,174
And they were in a bunch of camps.

81
00:03:06,185 --> 00:03:08,514
Some camps was, she
shouldn't get the money.

82
00:03:08,825 --> 00:03:13,064
Uh, you know, and she had ended up getting
married to somebody else and so forth.

83
00:03:13,404 --> 00:03:14,794
That must have been an
interesting conversation.

84
00:03:15,184 --> 00:03:15,974
Yeah, yeah.

85
00:03:17,025 --> 00:03:19,905
Yeah, uh, yeah, I don't even
want to go there, right.

86
00:03:20,345 --> 00:03:22,535
And so that was part of the camp.

87
00:03:22,545 --> 00:03:25,055
People said, uh, well, she
shouldn't get the money.

88
00:03:25,065 --> 00:03:26,015
She's just not right.

89
00:03:26,494 --> 00:03:28,384
And then the brothers
should get the money.

90
00:03:28,384 --> 00:03:30,714
There is blood relatives more than her.

91
00:03:31,124 --> 00:03:34,815
And in every case, uh,
she's gonna get the money.

92
00:03:35,054 --> 00:03:37,775
Yeah, I mean, it stands to reason
that he's able to do what he

93
00:03:37,775 --> 00:03:39,375
wants with his money, right?

94
00:03:39,375 --> 00:03:43,915
And, and maybe it seems that if he was
intentionally passing on these things that

95
00:03:43,915 --> 00:03:45,704
his true intent was to leave his money.

96
00:03:45,970 --> 00:03:46,760
To his ex girlfriend.

97
00:03:46,760 --> 00:03:47,180
Who knows?

98
00:03:47,200 --> 00:03:50,230
Maybe they made some sort
of crazy pact back then.

99
00:03:50,230 --> 00:03:53,370
They said, if you know what, if neither
one of us finds love, we'll leave

100
00:03:53,370 --> 00:03:54,639
each other our retirement accounts.

101
00:03:54,660 --> 00:03:58,479
Well, that's what some people said,
and what they said also, and I believe

102
00:03:58,479 --> 00:04:02,329
it was in the court case, nobody knows
what was, he's dead, nobody knows

103
00:04:02,329 --> 00:04:08,195
what was in his mind, why he did that,
but he, He purposely did not update

104
00:04:08,195 --> 00:04:10,535
that card, that beneficiary card.

105
00:04:10,535 --> 00:04:12,425
So now, she will get the money.

106
00:04:12,425 --> 00:04:14,145
I don't care how many times they appeal.

107
00:04:14,165 --> 00:04:15,715
My feeling is they're going to lose.

108
00:04:15,724 --> 00:04:17,825
They'll just end up
wasting money on attorneys.

109
00:04:18,075 --> 00:04:20,195
Because this goes by operational law.

110
00:04:20,195 --> 00:04:21,114
It's a contract.

111
00:04:21,115 --> 00:04:21,815
Seems likely.

112
00:04:22,115 --> 00:04:23,645
And this is a company plan.

113
00:04:23,815 --> 00:04:26,065
They can't just say, you
know what, he's right.

114
00:04:26,075 --> 00:04:27,225
She shouldn't get the money.

115
00:04:27,455 --> 00:04:28,965
They have fiduciary liability.

116
00:04:28,965 --> 00:04:30,915
Maybe they should decide what
he should do with his money.

117
00:04:30,955 --> 00:04:32,515
Right, but by law they can't.

118
00:04:32,525 --> 00:04:32,905
That's right.

119
00:04:33,115 --> 00:04:36,715
They, you know, there's an ERISA
plan and all of that, so speaking of

120
00:04:36,724 --> 00:04:39,055
ERISA, this begs another question.

121
00:04:39,185 --> 00:04:44,745
What if instead of being the ex
girlfriend, She was his ex wife.

122
00:04:45,055 --> 00:04:49,715
Well, if she was his ex wife, then as
long as they were married for at least

123
00:04:49,715 --> 00:04:53,985
a year, that she would have had to
have been his beneficiary of the plan.

124
00:04:53,994 --> 00:04:55,135
There would have been no choice.

125
00:04:55,135 --> 00:04:59,355
Here, with an ex, like a
girlfriend, a boyfriend, uh, you

126
00:04:59,355 --> 00:05:01,185
know, anyone other than a spouse.

127
00:05:01,185 --> 00:05:03,324
It's your choice who you want
to make your beneficiary.

128
00:05:03,324 --> 00:05:07,875
But with ERISA plans, these are
typically 401ks, pension plans, etc.

129
00:05:08,560 --> 00:05:12,270
You're, often times, if you're married,
your spouse is your beneficiary right

130
00:05:12,270 --> 00:05:16,900
away, but there is a rule that ERISA has
that says, if you get married, the plan

131
00:05:16,900 --> 00:05:21,499
can allow up to a year before that new
spouse becomes the automatic beneficiary.

132
00:05:21,499 --> 00:05:22,600
But they don't have to.

133
00:05:23,100 --> 00:05:25,629
Uh, remember that one case with six weeks?

134
00:05:26,364 --> 00:05:27,914
Uh, they don't, right, they don't have to.

135
00:05:27,914 --> 00:05:29,844
The plan can wait, but
they don't have to allow.

136
00:05:29,844 --> 00:05:32,174
That was the, uh, the Kidder
case from many years ago.

137
00:05:32,364 --> 00:05:32,914
I think it was.

138
00:05:32,914 --> 00:05:33,424
Yeah, yeah.

139
00:05:33,585 --> 00:05:34,845
New spouse, six weeks.

140
00:05:34,845 --> 00:05:35,214
That's right.

141
00:05:35,214 --> 00:05:37,854
Six weeks after they were married,
she killed, I mean, uh, died.

142
00:05:37,864 --> 00:05:40,344
She mysteriously died
and she got the money.

143
00:05:40,364 --> 00:05:41,014
Exactly.

144
00:05:41,015 --> 00:05:41,674
Yes, yes.

145
00:05:41,674 --> 00:05:42,904
After only six weeks.

146
00:05:43,275 --> 00:05:45,385
So, uh, let's go back.

147
00:05:45,505 --> 00:05:49,335
Let's say he was the ex spouse.

148
00:05:49,935 --> 00:05:54,794
So let's say he left his ex wife
on the beneficiary for okay.

149
00:05:55,155 --> 00:05:56,724
Now what would have happened?

150
00:05:57,205 --> 00:05:59,664
Well, probably depends upon
what state they live in, right?

151
00:05:59,754 --> 00:06:05,184
Because many states upon divorce,
you are automatically revoked unless

152
00:06:05,184 --> 00:06:09,424
and it does happen from time to time
unless your ex spouse re-nominates

153
00:06:09,424 --> 00:06:11,174
you as the beneficiary afterwards.

154
00:06:11,174 --> 00:06:15,304
Yeah, a number of states, more than half
of them actually, have revocation upon

155
00:06:15,304 --> 00:06:20,964
divorce laws, which means if you left
your, you got divorced, and a big mistake,

156
00:06:20,964 --> 00:06:24,085
very common mistake, you go through the
divorce and everything else, and you

157
00:06:24,085 --> 00:06:29,724
forget to update your beneficiary form,
and you leave now your ex spouse on there,

158
00:06:30,104 --> 00:06:36,995
uh, In those states, she's, she or he
is immediately removed as beneficiary.

159
00:06:37,005 --> 00:06:37,205
Yeah.

160
00:06:37,205 --> 00:06:39,395
Well, you know, those laws
come from somewhere, right?

161
00:06:39,555 --> 00:06:43,484
Like a bunch of politicians forgot to
update their beneficiaries afterwards.

162
00:06:43,484 --> 00:06:45,124
And they said, no more, that's it.

163
00:06:45,125 --> 00:06:46,775
We're going to make
this automatically law.

164
00:06:46,814 --> 00:06:47,224
Right.

165
00:06:47,445 --> 00:06:52,094
And in the, this was a Supreme Court case,
by the way, that, uh, established this,

166
00:06:52,424 --> 00:06:57,344
and even the justices, one of them said,
and you could, uh, listen to the video,

167
00:06:57,594 --> 00:07:00,454
uh, not the video, there's no video of
the Supreme Court, but the audio you could

168
00:07:00,455 --> 00:07:04,940
listen to, and one of them, uh, Uh, ask
the question, but what if, how do we know

169
00:07:05,130 --> 00:07:06,940
what exactly what I was talking about?

170
00:07:06,940 --> 00:07:07,820
What was in his mind?

171
00:07:07,850 --> 00:07:11,799
Maybe there was something there and
he purposely wanted to leave it to his

172
00:07:11,799 --> 00:07:16,439
ex spouse and they all decided that
exactly what you said, that if that

173
00:07:16,440 --> 00:07:21,319
was his intention after the divorce to
make sure your intentions are carried

174
00:07:21,320 --> 00:07:24,330
out, you update the beneficiary form.

175
00:07:24,565 --> 00:07:28,505
and name that ex spouse so everybody
knows that's what you wanted.

176
00:07:28,555 --> 00:07:28,875
All right.

177
00:07:28,875 --> 00:07:29,945
So if that's what you want.

178
00:07:29,975 --> 00:07:32,805
So now I see what you're getting at in
terms of our initial question, is it

179
00:07:32,965 --> 00:07:39,025
better to be, uh, you know, a girlfriend
or a ex girlfriend or an ex wife had,

180
00:07:39,055 --> 00:07:44,204
uh, with, with until you're married,
there is no, like, unless you're married,

181
00:07:44,204 --> 00:07:45,945
there is no automatic revocation.

182
00:07:46,415 --> 00:07:47,685
You can live together.

183
00:07:47,705 --> 00:07:50,285
You can be girlfriend,
boyfriend, doesn't matter.

184
00:07:50,525 --> 00:07:54,520
But unless you're married, Once
you break up with that individual,

185
00:07:54,610 --> 00:07:58,800
there is no automatic revocation
of that beneficiary form, right?

186
00:07:58,960 --> 00:08:03,279
So this is an unusual situation
because the whole point of we we

187
00:08:03,279 --> 00:08:08,379
call this an ERISA plan It's a
say a 401k under the federal laws.

188
00:08:09,039 --> 00:08:11,890
Spouses have huge protections.

189
00:08:11,890 --> 00:08:12,590
Mm hmm.

190
00:08:12,940 --> 00:08:18,450
And in almost everything the spouse is
protected Except in this scenario the

191
00:08:18,459 --> 00:08:20,740
ex girlfriend got the million dollars.

192
00:08:21,690 --> 00:08:23,130
Got the whole thing, not even half.

193
00:08:23,170 --> 00:08:23,440
Right.

194
00:08:23,440 --> 00:08:23,980
The whole thing.

195
00:08:24,000 --> 00:08:24,830
Got all of it.

196
00:08:25,050 --> 00:08:28,860
So she stood in a better position
than being, than being married.

197
00:08:29,800 --> 00:08:33,800
Makes me wonder, like, as you think
about that, like, what other areas

198
00:08:33,810 --> 00:08:38,740
of the law, you know, are, are people
better off being married or not married?

199
00:08:39,100 --> 00:08:42,620
Uh, and, and just think of a few off
top of my head, right, as, as people

200
00:08:42,620 --> 00:08:45,730
are thinking about, you know, again, not
necessarily directly related to that,

201
00:08:46,010 --> 00:08:52,085
but if you're, committed relationship
versus being, let's say, married, which

202
00:08:52,095 --> 00:08:53,525
also should be a committed relationship.

203
00:08:55,235 --> 00:08:55,995
That's a good one.

204
00:08:56,655 --> 00:08:57,505
You know what I mean.

205
00:08:57,505 --> 00:08:59,625
If you're just, if you're together, yes.

206
00:09:00,335 --> 00:09:03,145
Like a lot of people, especially as they
get older, they don't want to get married.

207
00:09:03,285 --> 00:09:04,515
They've been married once already.

208
00:09:04,515 --> 00:09:07,225
They want to keep things separate,
but they like to be together.

209
00:09:08,015 --> 00:09:10,905
There might be some advantages on the
income tax side of the equation because

210
00:09:10,905 --> 00:09:14,795
if you're married and file a, a joint
return, there can sometimes be a marriage

211
00:09:14,795 --> 00:09:18,785
penalty on certain issues versus if
you're separate and file single tax

212
00:09:18,785 --> 00:09:20,345
returns, there can be a benefit there.

213
00:09:20,645 --> 00:09:25,885
Uh, sometimes if an individual was married
already, they might be receiving certain

214
00:09:25,935 --> 00:09:30,035
social security benefits from an ex
spouse, where if they get remarried, those

215
00:09:30,035 --> 00:09:34,385
social security benefits might go away, so
it might be better off for them to remain,

216
00:09:34,385 --> 00:09:38,195
uh, separate as well, but it's interesting
to think, are there certain times when

217
00:09:38,195 --> 00:09:42,560
you'd be better off being not married,
being a, again, a boyfriend or girlfriend

218
00:09:42,560 --> 00:09:45,530
and maintaining that as a relationship
status versus actually being married.

219
00:09:45,530 --> 00:09:49,700
Well, the point of this, uh,
what I wanted to get to, is the

220
00:09:49,700 --> 00:09:51,760
importance of a beneficiary form.

221
00:09:51,760 --> 00:09:53,810
It's an ironclad contract.

222
00:09:54,050 --> 00:09:56,460
And this is not the first of these cases.

223
00:09:56,460 --> 00:09:59,650
I mean, this is one of the
strangest ones I've seen.

224
00:09:59,680 --> 00:10:03,510
I mean you know, ex girlfriend from 1989.

225
00:10:03,540 --> 00:10:08,020
That's when he broke up with her
in 1989, and he just died recently.

226
00:10:08,310 --> 00:10:11,000
But checking beneficiary
forms is critical.

227
00:10:11,000 --> 00:10:13,890
It may be one of the single
biggest mistakes people make.

228
00:10:14,420 --> 00:10:16,760
You're familiar with
other cases like this.

229
00:10:17,070 --> 00:10:18,760
A lot of them are in the divorce area.

230
00:10:18,760 --> 00:10:19,990
Remember the Kennedy case?

231
00:10:20,020 --> 00:10:20,340
Sure.

232
00:10:20,360 --> 00:10:21,540
Supreme Court case again.

233
00:10:21,640 --> 00:10:22,090
Right.

234
00:10:22,210 --> 00:10:22,450
Yep.

235
00:10:22,460 --> 00:10:22,640
Yep.

236
00:10:23,060 --> 00:10:27,170
Uh, the ex wife got, uh, got
the money, even though she said

237
00:10:27,170 --> 00:10:29,840
I, she waived her, her rights.

238
00:10:29,850 --> 00:10:30,920
She was a liar.

239
00:10:31,010 --> 00:10:32,200
Yeah, yeah, yeah.

240
00:10:32,440 --> 00:10:33,820
And the daughter went to the court.

241
00:10:33,820 --> 00:10:36,910
She said, but, but he didn't want to,
he didn't want her to get the money, but

242
00:10:36,910 --> 00:10:38,610
he didn't change the beneficiary form.

243
00:10:38,610 --> 00:10:40,210
And they said the same thing in that case.

244
00:10:40,210 --> 00:10:45,660
They said he had every opportunity to
change the form, but he chose not to.

245
00:10:46,240 --> 00:10:49,310
So and she got, why did she get the money?

246
00:10:50,185 --> 00:10:52,255
Well, because she was named
on the beneficiary form.

247
00:10:52,315 --> 00:10:52,805
Right.

248
00:10:52,925 --> 00:10:55,845
And also, you know, this is an ERISA case.

249
00:10:56,145 --> 00:11:00,895
Uh, so, you know, you got to
look at updates in your life.

250
00:11:01,095 --> 00:11:05,245
You got to, uh, you, you have to
make sure your beneficiary forms

251
00:11:05,245 --> 00:11:06,705
say what you want them to say.

252
00:11:06,705 --> 00:11:09,865
Going back to the ex girlfriend case,
we don't know what he wanted, but

253
00:11:09,935 --> 00:11:11,275
But apparently that's what he was.

254
00:11:11,355 --> 00:11:17,135
He had numerous warnings or not warnings,
uh, communications over the years from

255
00:11:17,135 --> 00:11:21,515
the company over many, many years, over
decades, it would seem to me like even in

256
00:11:21,515 --> 00:11:23,685
that case, if I was his advisor, right.

257
00:11:23,685 --> 00:11:26,535
And he said, yeah, you know, I
know this is weird, Jeff, but.

258
00:11:27,260 --> 00:11:29,340
I've got this girlfriend from 1989.

259
00:11:29,390 --> 00:11:31,020
And she's now married to somebody else.

260
00:11:31,020 --> 00:11:33,030
And she's now married, she's
now married to someone else.

261
00:11:33,190 --> 00:11:35,840
But I really want to leave her this money.

262
00:11:36,100 --> 00:11:40,400
My advice still might have been, hey, why
don't we fill out a new beneficiary form?

263
00:11:40,400 --> 00:11:41,020
Right, make it clear.

264
00:11:41,020 --> 00:11:43,160
And just, that's right, make
it clear, remove any doubt.

265
00:11:43,160 --> 00:11:46,730
You know, the beneficiary form is
what controls the disposition of

266
00:11:46,730 --> 00:11:49,690
assets most of the time, unless it's
overridden by some sort of federal

267
00:11:49,690 --> 00:11:51,020
or state law, things like that.

268
00:11:51,020 --> 00:11:55,180
But you know, the point is, this is like
the last act you have on this earth.

269
00:11:55,190 --> 00:11:57,890
Like you're you're gone and
this is the last little bit.

270
00:11:57,890 --> 00:12:02,440
I can't think of a worse scenario than
having your final wishes not fulfilled

271
00:12:02,730 --> 00:12:06,980
because it either wasn't clear or because
there was ambiguity and you left an

272
00:12:06,980 --> 00:12:11,030
opportunity for someone else to interpret
what you really wanted to happen.

273
00:12:11,230 --> 00:12:13,920
Right, and you should look at,
uh, activities in your life.

274
00:12:13,920 --> 00:12:17,030
I call them life events when they're
birth, a death, a marriage, a

275
00:12:17,030 --> 00:12:19,900
divorce, a new grandchild, change
of tax laws, whatever it is.

276
00:12:20,300 --> 00:12:22,000
These things should be updated.

277
00:12:22,000 --> 00:12:23,560
They override the wills.

278
00:12:23,740 --> 00:12:24,920
Oh, that was another thing.

279
00:12:24,920 --> 00:12:28,560
When I said, uh, there were a
lot of comments online on the

280
00:12:28,560 --> 00:12:32,400
article, people said he should
have said something in his will.

281
00:12:32,430 --> 00:12:34,990
Yeah, but where there's a will,
there's no way it's gonna work.

282
00:12:34,990 --> 00:12:35,260
Right.

283
00:12:35,295 --> 00:12:35,555
Yeah.

284
00:12:35,565 --> 00:12:38,915
But these were some professionals on there
says if he should have said something

285
00:12:38,915 --> 00:12:43,155
in the will that she doesn't get it,
she still would have got it because the

286
00:12:43,165 --> 00:12:46,165
beneficiary form overrides the will.

287
00:12:46,375 --> 00:12:47,825
It's a strong document.

288
00:12:47,855 --> 00:12:52,745
Now a little difference been if this
was an IRA, you don't have to in

289
00:12:52,745 --> 00:12:57,475
most cases or then maybe community
property leave to a spouse, right?

290
00:12:57,505 --> 00:12:58,695
You could leave to anybody.

291
00:12:58,695 --> 00:13:02,255
In fact, there's cases there where people
have taken their 401ks, move them to

292
00:13:02,255 --> 00:13:06,755
an IRA And then name, let's say their
kids gotten remarried and said, sorry,

293
00:13:06,765 --> 00:13:08,175
new spouse, you don't get the money.

294
00:13:08,175 --> 00:13:09,405
It goes to my kids when I'm gone.

295
00:13:09,405 --> 00:13:14,225
Because the ERISA laws protecting
spouses do not apply in an IRA.

296
00:13:14,405 --> 00:13:14,805
That's right.

297
00:13:14,805 --> 00:13:15,085
Yep.

298
00:13:15,505 --> 00:13:18,215
In fact, there's even cases on
file where, uh, people with, uh,

299
00:13:18,515 --> 00:13:22,975
non-ERISA plans, things like 403Bs,
don't get the same protection.

300
00:13:23,165 --> 00:13:23,735
That's right.

301
00:13:23,735 --> 00:13:27,555
There's that famous case, I don't know if
it was a case, but, uh, I think it was.

302
00:13:27,785 --> 00:13:30,615
We used to refer to it, uh,
matter of fact, I still use it.

303
00:13:30,615 --> 00:13:33,015
It's from January 20, 2005.

304
00:13:34,135 --> 00:13:35,505
From the New York Post.

305
00:13:35,785 --> 00:13:37,195
Uh, it was called Pension Pickle.

306
00:13:37,195 --> 00:13:39,425
We still give it out at our seminars.

307
00:13:39,435 --> 00:13:42,715
I still remember the headline, Broke
Widower Loses $1 million to in-law.

308
00:13:42,735 --> 00:13:43,125
Right.

309
00:13:43,335 --> 00:13:43,585
Right.

310
00:13:43,585 --> 00:13:46,015
You're a financial advisor, you
can't buy headlines that good.

311
00:13:46,265 --> 00:13:47,035
I know, I know.

312
00:13:47,035 --> 00:13:50,295
It was a great headline and, uh,
you just have to see the headline.

313
00:13:50,495 --> 00:13:54,285
So this woman worked, uh, you know,
403B for the New York City school

314
00:13:54,285 --> 00:13:56,895
system, accumulated a million dollars.

315
00:13:56,895 --> 00:14:02,445
She died and, uh, she didn't,
the spouse got disinherited.

316
00:14:02,815 --> 00:14:04,895
He said, how could this possibly be?

317
00:14:05,075 --> 00:14:09,435
Well, when she filled out her beneficiary
form, it was before she was married.

318
00:14:09,445 --> 00:14:10,885
Years and years ago.

319
00:14:11,145 --> 00:14:12,725
So, he wasn't even in the picture.

320
00:14:12,725 --> 00:14:13,595
Who did she name?

321
00:14:13,735 --> 00:14:15,915
Her brother or mother?

322
00:14:15,925 --> 00:14:17,485
Her mother, her uncle,
and her sister, I think.

323
00:14:17,875 --> 00:14:18,645
Yeah, the brother.

324
00:14:18,955 --> 00:14:20,455
The, the sister got the money.

325
00:14:20,455 --> 00:14:22,975
The mother and the uncle,
I think, uh, pre deceased.

326
00:14:22,975 --> 00:14:23,175
Yep.

327
00:14:23,385 --> 00:14:26,755
And the sister got the money because
she was on the beneficiary form.

328
00:14:26,755 --> 00:14:27,975
He said, but I'm the spouse.

329
00:14:27,975 --> 00:14:28,905
I've been married to her for years.

330
00:14:28,945 --> 00:14:30,985
Well, she didn't update
the beneficiary form.

331
00:14:30,995 --> 00:14:33,865
Yeah, and, and I'm sure people are,
again, you know, this is a confusing area.

332
00:14:33,865 --> 00:14:35,895
People are saying, but wait, they
were married for more than a year.

333
00:14:35,895 --> 00:14:36,495
What's the difference?

334
00:14:36,495 --> 00:14:39,895
The difference is state and
local 403Bs, like this one,

335
00:14:40,105 --> 00:14:41,435
are not covered under ERISA.

336
00:14:41,435 --> 00:14:41,755
Right.

337
00:14:41,945 --> 00:14:45,175
You know, what, what seems as, you
know, As though it's so simple, you

338
00:14:45,175 --> 00:14:48,875
know, hey, just write down a name on
a piece of paper is actually dictated

339
00:14:48,875 --> 00:14:53,485
by , a various number, a significant
number of, of laws that all have, uh,

340
00:14:53,545 --> 00:14:57,645
you know, strange interactions with
one another where, you know, ERISA

341
00:14:57,645 --> 00:15:02,375
overrides the beneficiary form, but
state, but beneficiary form overrides

342
00:15:02,375 --> 00:15:06,265
the will, but state law can override, I
mean, it, it's a very complicated mess.

343
00:15:06,265 --> 00:15:11,005
And again, the challenge here is not
that it seems difficult and is difficult.

344
00:15:11,015 --> 00:15:15,115
The challenge is it often seems simple,
so people take for granted that what

345
00:15:15,115 --> 00:15:18,185
they're doing or what they think they're
doing is actually going to happen,

346
00:15:18,425 --> 00:15:22,825
when in reality they're not aware of
the nuances and intricacies of the law

347
00:15:23,085 --> 00:15:24,495
and that's when these mistakes occur.

348
00:15:24,505 --> 00:15:25,425
Yeah, make sure to update.

349
00:15:26,525 --> 00:15:28,415
forms, make sure you can find them.

350
00:15:28,615 --> 00:15:32,805
I've seen problems recently with some
mergers and financial planning firms

351
00:15:32,805 --> 00:15:39,015
too, uh, where the documents don't
carry over to the, uh, next institution

352
00:15:39,025 --> 00:15:40,695
or they list the wrong beneficiary.

353
00:15:40,695 --> 00:15:43,545
We just saw a case where they
listed the estate rather than the

354
00:15:43,545 --> 00:15:47,195
name beneficiaries and there were
millions of dollars there and nobody

355
00:15:47,195 --> 00:15:49,145
noticed it until the guy was dead.

356
00:15:49,145 --> 00:15:50,755
Well, you can't change it after that.

357
00:15:50,815 --> 00:15:54,545
Yeah, it looks, look anytime there's
a question about your beneficiaries,

358
00:15:54,545 --> 00:15:57,295
there's a change in institution,
a change in life events, etc.

359
00:15:57,755 --> 00:16:00,935
Then, you know, I, I, I
adhere to one philosophy.

360
00:16:01,385 --> 00:16:03,245
When in doubt, fill one out.

361
00:16:03,335 --> 00:16:04,155
Oh, that's a good one.

362
00:16:04,155 --> 00:16:05,475
Fill out a new beneficiary form.

363
00:16:05,475 --> 00:16:05,825
That's it.

364
00:16:05,855 --> 00:16:07,095
When in doubt, fill one out.

365
00:16:07,095 --> 00:16:07,255
Yeah.

366
00:16:07,255 --> 00:16:08,295
It can't hurt.

367
00:16:08,605 --> 00:16:12,575
If you're saying the same thing, All
that will happen is it'll be even more

368
00:16:12,585 --> 00:16:13,865
clear that that was your intention.

369
00:16:13,975 --> 00:16:17,545
And keep a copy because there
could even be a problem even if you

370
00:16:17,545 --> 00:16:19,305
think the institution has a copy.

371
00:16:19,305 --> 00:16:23,125
It may be an old copy, who knows,
before they went through mergers or

372
00:16:23,145 --> 00:16:24,955
transitions and things like that.

373
00:16:25,075 --> 00:16:25,295
Yeah.

374
00:16:25,315 --> 00:16:27,555
Well, update your beneficiary form.

375
00:16:28,010 --> 00:16:29,710
Absolutely critical step as always.

376
00:16:29,970 --> 00:16:31,720
Ed, thanks for updating us on that case.

377
00:16:31,720 --> 00:16:35,860
That is a weird one for sure, but
a great opportunity to learn from.

378
00:16:35,950 --> 00:16:36,650
That's right.

379
00:16:36,930 --> 00:16:38,510
Check your beneficiary forms.

380
00:16:38,510 --> 00:16:39,210
Do it now.

381
00:16:39,220 --> 00:16:39,650
That's right.

382
00:16:39,650 --> 00:16:41,790
And we'll see you next time on
The Great Retirement Debate.

383
00:16:42,920 --> 00:16:46,030
Jeffrey Levine is Chief Planning
Officer for Buckingham Wealth Partners.

384
00:16:46,250 --> 00:16:49,430
This podcast is for informational and
educational purposes only and should

385
00:16:49,430 --> 00:16:52,580
not be construed as specific investment,
accounting, legal, or tax advice.

386
00:16:52,800 --> 00:16:55,660
Certain information mentioned may
be based on third party information

387
00:16:55,660 --> 00:16:58,250
which may become outdated or
otherwise superseded without notice.

388
00:16:58,580 --> 00:17:01,790
Third party information is deemed to
be reliable, but it's accuracy and

389
00:17:01,790 --> 00:17:03,200
completeness cannot be guaranteed.

390
00:17:03,370 --> 00:17:06,300
The topic discussed in corresponding
arguments are those of the speakers

391
00:17:06,530 --> 00:17:09,110
and may not accurately reflect
those of Buckingham wealth partners.