Montgomery County Circuit Court Decision Highlights Importance of Updating Beneficiary Designations After Divorce

Estate law and family law are closely intertwined. Both deal with relationships and emotional ties. Many of Altman’s estate planning clients choose their spouse as the primary beneficiary of their estate and as power of attorney or health care agent. It’s a logical choice: you’ve built a life with this person, they know you and your needs well, and you likely share several assets. But what happens if the marriage ends? With an estimated 40-50 percent of married couples in the United States eventually filing for divorce, it’s a crucial question to consider.

A divorce is not just a separation of a couple but also of assets. You need to decide who gets the house, who gets custody of any minor children, and how to divide your shared possessions. Divorce changes many aspects of life, and estate planning needs to be amended to reflect these changes. A recent case decided in the Circuit Court of Montgomery County highlights the importance of covering all bases in post-divorce estate planning and beneficiary designations.

Case Study: In the Matter of Batchelor

Brenda Batchelor, the personal representative for the estate of Bonnie Campbell, filed a civil suit against the decedent’s former husband, Michael Campbell. Bonnie, a federal employee,  had a Thrift Savings Plan (TSP) established under the Federal Employees’ Retirement Systems Act of 1986 (FERSA).

Bonnie and Michael divorced in 2010, and they entered into a property settlement agreement where Michael agreed to waive all rights to the proceeds of Bonnie’s TSP. However, Bonnie never officially removed Michael as the sole beneficiary of her TSP account, and upon her death in 2019, all proceeds from her TSP account were distributed to Michael. Batchelor filed a civil complaint against Michael on behalf of the estate, stating that Bonnie’s estate should have gotten the funds from the TSP given the Campbells’ property settlement agreement. Michael argued that under FERSA, he was entitled to the TSP proceeds. In an appeal decision, the Montgomery County Circuit Court sided with Michael, concluding that FERSA, as a federal statute, preempted the property settlement agreement, which was under state law.

Changing Beneficiaries After Divorce

The controversy that ensued over the distribution of Bonnie Campbell’s TSP benefits shows that, even if one piece of the divorce puzzle appears insignificant or already covered, it is essential to review all accounts in your estate plan with your attorney and financial professionals. These include life insurance policies, retirement accounts, and payable-on-death (or TOD) accounts. 

After a divorce, many states will automatically revoke any gifts given to the former spouse under a will drafted during the marriage. However, if your spouse is listed as a beneficiary on a life insurance or pension plan, the plan must be manually changed to remove them. Even if you have an agreement in place, as the Campbells did, there’s no guarantee that an employer or benefits provider will know this agreement. They will go by what’s on the paperwork in front, so every piece of paperwork needs to be completed per its guidelines.

While some documents can be updated during divorce proceedings, such as guardianship of minor children and distribution of property, beneficiary designations on life insurance or retirement accounts can rarely be changed until after the divorce. Doing so before the divorce is final would likely require the consent of your soon-to-be-ex-spouse, which might be feasible depending on your relationship and circumstances. so, different states have different requirements, so consult with your attorney on the specific statutes of your state.

Fortunately, changing beneficiaries is a relatively simple process. It can be done by contacting your life insurance company or human resources department at your place of work and filling out new forms. Some beneficiary changes may be made online, while others require completing a physical form. This quick review and revision of beneficiary forms could save you and your family court time and costs. Beneficiary designations on IRA’s can be provided as well.

Divorce is a difficult and often frustrating process. There are a lot of documents to sign and a lot of changes to make. It would be easy to overlook the necessary steps in it all. Your attorney can assist you in identifying everything that needs to be completed to ensure a smooth transfer of assets and avoid potential conflicts in the near and distant future. The attorneys at Altman & Associates can be reached at 301-468-3220 or through the website at

Contributed by Elizabeth Green Paralegal

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