News Flash


Posted on: September 19, 2018

Updating Beneficiary Designations: Why It's So Important

Beneficiary update

When you sign up for TMRS, life insurance, ICMA-RC or any other bank or investment account, you are required to list a beneficiary. This is the person (or persons) who will receive the proceeds should you pass away. Often times, people fill out the form and move on, maybe even forgetting about which beneficiary is on which account. It is so very important to always check your beneficiary’s after you have had a life changing event such as death, marriage, divorce, etc.

In hindsight, that seems to have been the case for the example listed below:

John Doe, a retired government employee, had been married three times. During his second marriage, he signed up for a life insurance policy and enrolled in TMRS. He listed his then-wife, Jane, as the beneficiary of the policy. Some years later, he divorced and remarried (wife #3).

Then John died from cancer. Among the non-probate assets he left behind was his TMRS account (valued at $54,234) and life insurance policy (valued at $20,000). Unfortunately, he didn’t update his beneficiary designations. His ex-wife Jane (wife #2) filed for—and received—those benefits, despite being divorced from John for more than 10 years.

The Beneficiary Battle – Who Wins

Normally, when a person who passes away neglects to update their beneficiary designations, the state can step in to help. There is no guarantee how the courts will rule. If there’s been a change in a deceased person's marital status, but a contract does not reflect that change, many state statutes effectively revoke the old beneficiary designation that instructs the death benefit to go to a former spouse. But don’t rely on that ruling.

In John’s case, his widow, Mary, used this argument in state court to try to recover the benefits. However, the case didn't end there:

Enter the Supreme Court of the United States (SCOTUS)….Doe vs. Smith went all the way to the U.S. Supreme Court. In the end, the Supreme Court sided with Jane Smith, his ex-wife, rather than Mary Doe his current wife. Jane (wife #2) was able to keep the benefits.

The Importance of Updating Your Beneficiary DesignationsDesignated Beneficiary updated

While a relatively uncommon situation, Doe vs. Smith illustrates how important it is to update your beneficiary designations. It is common for assets to go to people we don't intend because beneficiary designations are outdated. As with any insurance or investment account, keeping your beneficiary designations current is an important part of your family's financial future.


What to Do

What's the best rule of thumb? Check your beneficiary designations periodically to make sure they are what you intend. Check all of your estate planning documents every three to four years—and the same goes for beneficiary designations. Most importantly, when you get divorced or make significant life changes, check and revise all these documents.

With beneficiary designations, it's always the employee or investment holder who is responsible for updating them. If you need help, contact Human Resources or your financial institution to receive proper forms to make the change.

When it comes to protecting your loved ones, keep beneficiary designations—and all your estate planning documents—current is critical.

Below are links where you will find change of beneficiary forms for all of your accounts. Please note, if you are vested with TMRS (been a member for 5 years or more) you MUST complete a Vested Beneficiary form and send to TMRS. You can also make this revisions online at You may also send to Fannie Layer at Failure to complete the form could tie your account up in the courts for months.

Life Insurance Beneficiary designation

Beneficiaries for Final check in case of death

Beneficiaries for Final check in case of death (fire or police)

ICMA-RC Beneficiary Designation form

TMRS Vested Beneficiary Form

Facebook Twitter Google Plus Email