My husband died with no named beneficiary for his retirement plan. It’s been two years

Forgetting to list beneficiaries can cause headaches for loved ones. – Getty Images/iStockphoto

Dear MarketWatch,

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My husband passed away in August 2021. He did not list a beneficiary on his retirement plan, because he had divorced his ex-wife and removed her as his beneficiary in the Retirement Systems of Alabama.

We married in June 2015. I wasn’t added to his retirement plan because, honestly, we never thought about it. I have a marriage license and proof of real estate that we owned together from January 2014 until he passed away.

A Retirement Systems of Alabama worker told me that his retirement money is in the “system.” I would just like to know who the “system” is and why am I not eligible to receive this money. I was legally married to him and never spent one night away from him.

Is there anything I can do to receive his retirement benefits?

Dear Reader,

Unfortunately, when a person dies without having beneficiaries listed on retirement accounts, it can create quite the headache for their loved ones. I’m sorry you’re currently trying to make sense of this.

It’s good that he removed his ex-wife from the designated beneficiaries list — having the wrong beneficiary could be much worse than having no beneficiary at all. Beneficiaries can be listed on many accounts, such as transfer-on-death and payable-on-death accounts, life insurance, retirement accounts and pensions with survivor benefits. In some cases, these designations can be contested — but that takes time, money and energy, as well as the involvement of the court system.

The Retirement Systems of Alabama stresses that point. “It is very important for members to keep their beneficiary designations current. Failure to do so can result in possible loss of valuable benefits to your survivors,” it says in the RSA member handbook.

The program also states that if an employee has died without a designated beneficiary, the “appropriate death benefit” is paid to the estate.

Contact the RSA again to see if they can be more specific about how they pay out benefits to an estate. You may need to go deeper to find that money, such as searching probate court records.

The probate process, which can be lengthy — at least six months, possibly — starts with filing a petition and seeking immediate control of the estate. In Alabama, assuming your husband was a resident of the state, the entire estate would go to you as the surviving spouse if there were no descendants or living parents. If there were, the estate would be split, according to the Mobile County Probate Court’s website.

An estate-planning attorney could assist you in finding the assets and executing probate. There’s no deadline for this when an estate is intestate, meaning there was no will, but as with most financial situations, it’s best to act sooner rather than later.

Just one more note, for you and any other readers: Check the beneficiaries on all of your accounts to make sure they are up to date. If you don’t have anyone listed, do that now so there are no estate hiccups later on.