Recently, the Georgia Court of Appeals heard a case where a divorce settlement agreement affected property in the estate of one of the parties after his death. In Frier v. Frier, the parties entered into a settlement agreement regarding distribution of their property, which notably stated that each party “shall have and receive any sums of money [in] their respective checking accounts, savings accounts, IRAs, retirement funds or accounts or other properties in their own individual names.” Frier v. Frier, A09A1876; Frier v. Frier, A09A1877(2010). The husband had previously established a 12 month certificate of deposit, which was payable to the wife upon his death. Id. at 2. After the execution of the settlement agreement but before the final divorce, the husband renewed the CD but did not change the wife as beneficiary. Id. The husband died shortly after the divorce was finalized and the wife alleged that, as beneficiary, she was entitled to the funds in the CD. Id.
Despite a challenge by the executor of the husband’s estate, who argued that the settlement agreement terminated the wife’s rights as a payable on death payee, the Georgia Court of Appeals held in favor of the wife. The Court stated that though the wife “relinquished the interest she may have had in the account by virtue of her marriage,” the settlement agreement language was not sufficiently broad so as to waive “her right to payment from the POD account as the death beneficiary specified by [the husband] when he created the account and so remaining on the day he died.”Id. at 4.
In this case, the facts are not clear whether the husband intended to remove his ex-wife as beneficiary. Either way, it is a lesson to those going through a divorce of how important it is to make sure your settlement agreement addresses all assets clearly and to check and/or change the beneficiaries of any accounts you may have to prevent unintended consequences.