Stay in the Know: Why Updating Your Beneficiary Designations Is Essential After Divorce

A recent Fourth Circuit decision (Boyd v. Metropolitan Life Ins. Co.) reinforces a critical but often overlooked point: under federal ERISA law, beneficiary designations control—not divorce agreements.

One often-overlooked but critically important legal principle that can significantly affect your estate and financial planning—particularly after a divorce—is the need to keep your beneficiary designations up to date. Failing to do so can lead to costly, emotionally draining disputes that are entirely avoidable with a simple administrative update.

A federal case, Boyd v. Metropolitan Life Insurance Co., illustrates this risk clearly. In that case, Mary Boyd maintained a life insurance policy through her employer, which was governed by ERISA—the Employee Retirement Income Security Act. Although she and her husband divorced, and their separation agreement explicitly stated that he waived any rights to her life insurance benefits, she never updated the beneficiary designation with the insurance provider. When she passed away, the benefits were paid to her ex-husband—because he remained the named beneficiary on file.

The court upheld this outcome, emphasizing that under ERISA, plan administrators are legally required to follow the plan documents as written. This means they must distribute benefits to the individual listed on the beneficiary form, regardless of any conflicting terms in a divorce decree or separation agreement. Unless the plan documents are formally updated, even a legally binding private agreement could not in this case override what’s on file.

This case serves as a powerful reminder of the importance of regularly reviewing and updating your estate plan and review of your beneficiary designations—especially after major life events such as divorce, marriage, the birth of a child, or changes in your financial goals. It is strongly recommended you take the time to review all your estate plan and accounts, life insurance policies, and other ERISA-governed benefits to ensure your they reflect your current intentions. It’s a simple but essential step to protect your legacy and ensure your assets are distributed according to your wishes.