The Forms That Outrank Your Will: Beneficiary Designations, Contingent Beneficiaries, and the ERISA Divorce Trap in North Carolina
Key Takeaways
A beneficiary designation is a contract with the plan or insurer. It generally controls who receives the account or policy proceeds, regardless of what your will or trust says.
A missing or outdated contingent beneficiary can send retirement assets into probate, accelerate income taxes, and leave money to minors who cannot legally manage it.
North Carolina law treats a former spouse as having predeceased you under your will and revocable trust after an absolute divorce. No comparable North Carolina statute removes a former spouse from a beneficiary designation.
For an ERISA-governed plan, such as a private-employer 401(k), federal law requires the plan to pay the beneficiary named in the plan documents. A former spouse who is still on the form can collect the account, even if the divorce settlement said otherwise.