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  • Writer's picture Bryanne Flannery

Post-Divorce Beneficiary Designations — The Failsafe Isn't Fool Proof

Congratulations, Counselor. You got your client divorced. The Judgment of Absolute Divorce is signed and the Marital Settlement Agreement is incorporated and approved. However, the Appellate Court of Maryland reported decision issued on February 28, 2024, In the Matter of Brenda Batchelor, serves as a reminder that your advice does not stop there.

It is important to remind clients that they should ensure that their financial self-protection is in good order. Reminding clients that, once their divorce is final, they should follow the settlement agreement as it pertains to their retirement assets is just the first step. Often these agreements provide that the owner of a retirement account has the freedom to designate a new beneficiary after the parties are divorced, and that the former spouse shall no longer be entitled to such death or survivor benefits upon the owner’s death. While a Marital Settlement Agreement should provide a failsafe or fallback provision stipulating that the “waiving spouse” shall disclaim the benefits should they nonetheless be paid, the Appellate Court of Maryland has recently held that, at least with respect to federal government retirement benefits in a Thrift Savings Plan, this is not sufficient under the doctrine of preemption.

The facts found in In the Matter of Brenda Batchelor are such that we often see in divorce proceedings: Former Wife (now deceased) was a federal employee who had a Thrift Savings Plan (TSP). In the parties’ MSA, former Husband waived all claims to Wife’s TSP. After the parties were divorced, Wife did not change the beneficiary of her TSP prior to her death. As a result, Husband was paid more than $700,000 from Wife’s TSP, because he was the named beneficiary. Wife’s estate argued that Husband disclaimed his rights in the MSA. Ultimately, the Appellate Court ruled that the MSA was governed by Maryland State law and the statutory scheme by which the TSP is governed fell under conflicting Federal law. The TSP statutory scheme provides that the account holder must change the beneficiary by notifying the appropriate authorities. Because Wife failed to do so prior to her death, Federal law supersedes Maryland State law, and Husband was entitled to the $700,000+. While the case includes a compelling dissenting opinion, we will need to wait and see if either party requests our Supreme Court to consider the matter.

What actions can attorneys take to safeguard against this? The majority opinion highlights the need for us to notify our clients, in writing, to check/change beneficiary designations for retirement plan death benefits, especially if the other party is waiving all claims. It is our duty to protect our client's interests, even after the MSA is signed and the divorce is finalized.

If you want to learn more, contact Wasserman Family Law at or call our main number 410-842-1070.

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