When you first became a federal employee, you filled out a number of forms related to your benefits. You might have established a contribution schedule for your Thrift Savings Plan, opted for Federal Employees Group Life Insurance, and made other decisions related to your benefits.
Another big decision revolved around your beneficiaries. You filled out a form, naming someone (or several someones) to receive any available benefits in the event of your untimely death. Those benefits might include:
- Life insurance benefits
- A payout of unused annual leave
- Funds in your Thrift Savings Account
- The Survivor Annuity (for your spouse)
- And so on
You made these decisions years ago, and perhaps you haven’t given them much thought in the meantime. But we should all revisit our beneficiary designations on a regular basis, because our lives can and do change over the years.
Consider this hypothetical scenario: Joe began his career as a federal employee 23 years ago. He designated his wife, Pam, to receive the proceeds from his life insurance policy, funds in his TSP, and the Survivor Annuity. But Joe and Pam divorced 12 years ago, and he has since remarried. Who will receive his benefits? His ex-wife, Pam, or his new wife, Debra?
Well, it depends…
A court order takes precedence so if Joe and Pam’s divorce decree had stipulations for the distribution of Joe’s retirement benefits, TSP, life insurance, Survivor Annuity, etc… those orders will be followed. Prior to retiring, it is important for Joe to go back and look at his divorce decree. If he’s like most people, he hasn’t looked at it since his divorce was final so reviewing the paperwork before his retirement date would be wise.
The takeaway lesson here is that because life can change, we should all keep an eye on those beneficiary designations throughout the years. Estate planning is an ongoing process, just like financial planning. Continue to meet with us as you plan for your financial future, but don’t forget to consult with an estate planning attorney, too.
