If a 401k does not list a spouse as the beneficiary, do they have any right to it?

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If a 401k does not list a spouse as the beneficiary, do they have any right to it?

My brother started a life insurance and 401k 5 years ago with his job. When he got married last year he never changed the paperwork. Sadly, last month he took his own life. I know that the life insurance is now void due to the suicide. However what happens to the 401k? Does that stay in my name (his sister) since he never changed it to his spouse? And, if so, how would I fight that his wife has already started the process to try to get the 401k?

Asked on September 24, 2011 under Estate Planning, Arizona

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

First of all, most life insurance companies only nullify a policy if a suicide is committed within the first 2 years after it goes into effect. This is known as the "suicide clause". So check the policy carefully; you may still be able to collect. Also, if the policy has not been voided, his wife is not entitled to the proceeds if your name is on the policy. Life insurance proceeds pass outside of a person's estate and are paid directly to the named beneficiary (in some cases, if an ex-wife is left as a beneficiary then state law requires otherwise, but this is not your situation).

As for a 401k, like life insurance, these proceeds do not become an asset of the estate. Typically they too pass to whomever is listed as the beneficiary. However, federal law dictates that a surviving spouse be the primary beneficiary of their deceased spouse's 401(k) plan benefit unless the surviving spouse signs a written waiver.

Note: If there is also an IRA involved, if your brother also lived in AZ (a community property state) his spouse may have rights to it regardless of whether she is named as the primary beneficiary.


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