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NEW YORK (MainStreet) — When it comes to insurance policies and retirement plans, beneficiary status can challenge the finances of high-earning spouses in divorce.

"401(k) plans and pensions are more complicated to divide than IRAs," said Kevin R. Worthley, certified divorce financial analyst with Equitable Divorce Solutions in North Smithfield, Rhode Island. "An IRA requires only a copy of the divorce agreement and other paperwork."

Pensions and 401(k) plans both require a legal document called a Qualified Domestic Relations Order (QDRO).

"Whoever is listed as the beneficiary on financial accounts would be entitled to assets at the spouse's death unless a QDRO from a previous divorce is in effect and stipulates otherwise," said Marilyn Timbers, Voya retirement coach and financial advisor with ING Financial Partners.

Although naming a husband or wife as 100% primary beneficiary isn't required, certain employer retirement plans (ERISA) may require a spouse's notarized signature waiving beneficiary rights.

"Assets that were contributed before the marriage and their appreciation are typically protected in a divorce even without an agreement," said Jonathan Wolfe, an attorney and managing partner with Skoloff & Wolfe in Livingston, N.J. "In general it is only the marital contributions plus their appreciation that is at issue."

Ideally, the outcome of a divorce is fair division of assets by taking into account each spouse's potential earnings, the growth potential of a household's assets, the number of years a couple has been married and how many minor children are in the picture.

"Many people assume assets are divided fifty-fifty in a divorce but this is often not the case," Timbers told MainStreet. "One couple may end up with all of one asset, such as a retirement account, while the other ends up with the house."

Contributions to a retirement plan during marriage will be subject to division in divorce either equally in community property states, such as California, or equitably in equitable distribution states, such as New York.

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"A divorce decree could require a spouse to leave their ex as beneficiary on insurance policies," Timbers said. "It's often the higher-earning spouse that must keep their ex-spouse as beneficiary for alimony or child support payments or to keep up with premium payments so the policy does not lapse."

When there is no stipulation in the divorce decree, the policy owner has a right to replace the beneficiary but many overlook it.

"When a divorcing spouse forgets to change the beneficiary on insurance policies, annuity and medical payouts, for example, the ex-wife or ex-husband husband still gets the money, even if the participant spouse remarried again before death," Worthley told MainStreet.

Withdrawing assets from one spouse's account and depositing it into a separate account during the divorce process can create clarity.

"This helps avoid the issue of an ex being listed as a beneficiary on a retirement account and pulls the assets into one's own control," said Timbers.

As for life insurance, spouses are not required to list each other as heirs but doing so is an added measure of security.

"In order to protect individual interests in the event of a divorce, spouses can be listed as owners on each other's policies," said Marcia Beckford, an agency recruiter with Prudential in Brooklyn and Queens.

Buying multiple policies allows a husband or wife to designate different beneficiaries for each policy but because cash accumulation in a life insurance policy can be considered joint depending on the state of residence, division is tricky.

"Usually the assets are assigned to the owner of the policy in exchange for another asset," said Timbers.

- Written by Juliette Fairley for MainStreet