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Farmers Insurance Group Estate Planning Alert: The Costly Mistake That Could Leave Assets to an Ex

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'Farmers Insurance Group employees should remember that updating a will is only part of the divorce process—beneficiary designations and trusts must also be reviewed to keep estate plans aligned with their intentions.' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

'Farmers Insurance Group employees often underestimate how quickly outdated beneficiary designations can unravel even the best estate plans, making regular reviews after major life events essential.' – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

1. Why wills alone may not be sufficient in estate planning after divorce.

2. How outdated beneficiary designations can override a will.

3. Practical steps Farmers Insurance Group employees can take to align estate plans with their intentions.

Divorce is often considered the final stage in dividing assets and property. However, for many Fortune 500 employees, one overlooked detail can upend years of careful planning and unintentionally allow an ex-spouse to receive a significant inheritance. If beneficiary names on key accounts and policies remain unchanged, even the most thorough will cannot stop this outcome. Because certain assets transfer directly to the listed beneficiary without going through probate, retirement plans, life insurance policies, annuities, and some bank accounts are especially at risk.

Many people don’t realize how prevalent this issue is. According to Wealth Enhancement financial professional Patrick Ray, 'Your ex‑spouse is typically treated as if they predeceased you for the purposes of your will under many state laws once a divorce is finalized.' This may remove them from the will, but not from all accounts. That means that while state law might automatically exclude an ex from a will, it does not override beneficiary designations on Farmers Insurance Group employee retirement accounts and insurance.

Why Wills Are Not Enough

Some believe that updating a will by itself is sufficient to carry out their wishes. However, wills have limitations that can undermine even the most thorough planning. For example, a will that is valid in one state may no longer be effective in another, and states like Florida may require a new will after divorce. For Fortune 500 employees relocating between different states, intestate succession laws could intervene, transferring property to unintended relatives.

'The biggest misconception is that your will covers everything,' says Patrick Ray. The reality is that many accounts pay directly to the person listed as beneficiary, bypassing probate altogether.

Beneficiary Designations Override Wills

Beneficiary designations are often the single biggest risk in estate planning. Retirement funds such as 401ks, IRAs, pensions, annuities, life insurance, and payable-on-death bank accounts pass directly to the person listed. So for Fortune 500 employees, if an ex-spouse is still listed, that person will receive those assets—regardless of what the will states.

According to Wealth Enhancement financial professional Michael Corgiat, 'A will only controls assets in your sole name without a designated beneficiary.' Overlooking even one outdated designation could undo a lifetime of planning and result in benefits going to someone unintended.

Federal Law Can Override State Protections

When federal law applies, the situation becomes more complex. Retirement programs such as 401ks and pensions fall under ERISA, which requires administrators to honor the named beneficiary, even if that person is an ex-spouse. For Fortune 500 employees covered under ERISA plans, this federal rule takes precedence over state divorce laws.

In some cases, divorce decrees may require an ex-spouse to remain as beneficiary to satisfy obligations like child support or alimony. 'It’s crucial to verify what your divorce orders actually state,' warns Corgiat.

Beyond Wills: Trusts Provide Additional Coverage

Employees and retirees can strengthen their estate planning by using trusts alongside wills and beneficiary forms. Revocable and irrevocable living trusts can help channel assets more effectively and lessen the chances of an ex-spouse receiving an unintended inheritance. For Fortune 500 households, trusts can offer adaptability, protection from creditors, and potential tax advantages, depending on the type selected.

Prenuptial and postnuptial agreements can also help by clearly defining inheritance rights, reducing disputes, and offering clarity in the event of divorce.

The Consequences of Overlooking Updates

Failing to update beneficiary designations, wills, or trusts can erase years—even decades—of preparation. For Fortune 500 professionals, this could result in large retirement accounts or life insurance payouts going to an ex-spouse instead of children or a current partner. Estate and probate laws vary considerably by state, and ERISA introduces another layer of complexity, making it critical to coordinate with professionals.

Corgiat emphasizes, 'Attempting to handle these decisions without professional help is risky.' Working with financial advisors and attorneys can help align estate planning with current wishes.

Practical Steps to Stay Aligned

To mitigate risk, employees should:

1. Update beneficiary designations promptly after divorce.

2. Confirm that divorce orders are being followed.

3. Review wills and trusts after major life events such as marriage, divorce, childbirth, or relocation.

4. Consider using trusts to centralize distribution of assets.

5. Consult with financial advisors and attorneys to navigate state and federal regulations.

Recent data shows that over half of U.S. households had retirement accounts such as 401ks or IRAs ¹ —which highlights how common it is for Fortune 500 retirees to hold assets that might pass through outdated beneficiary designations.

Even if a will is updated, an ex-spouse could still receive benefits through overlooked accounts. Trusts, updated designations, and careful review of divorce orders are key tools for aligning estate documentation with long-term wishes.

Think of it like home protection: while a strong front door (the will) may be locked, open side gates (outdated beneficiary designations) can grant entry. Fortune 500 employees should confirm that every account and document is consistent with their intentions—so their plans function as intended.

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Articles you may find interesting:

Sources:

1. American Society of Pension Professionals & Actuaries. ' More Than Half of U.S. Households Have Retirement Accuonts, CRS Says ,' by John Iekel. March 4, 2025.

Other Resources:

1. Hutchinson Thomas. ' The importance of updating your will after a divorce .' May 4, 2024.

2. Waypoint Legal. ' Beneficiary Designations: Why You Should Regularly Update Them .' March 4, 2025.

3. Investopedia. ' Divorce and 401(k): What You Need to Know ,' by Greg Daugherty. Feb. 7, 2025.

What is the 401(k) plan offered by Farmers Insurance Group?

The 401(k) plan at Farmers Insurance Group is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.

How does Farmers Insurance Group match employee contributions to the 401(k) plan?

Farmers Insurance Group offers a matching contribution to the 401(k) plan, which typically matches a percentage of the employee's contributions, up to a certain limit.

What are the eligibility requirements for the 401(k) plan at Farmers Insurance Group?

Employees of Farmers Insurance Group are generally eligible to participate in the 401(k) plan after completing a certain period of employment, usually within the first year.

Can employees of Farmers Insurance Group make changes to their 401(k) contributions?

Yes, employees of Farmers Insurance Group can change their contribution amounts at any time, subject to certain plan rules.

What investment options are available in the Farmers Insurance Group 401(k) plan?

The Farmers Insurance Group 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to tailor their investment strategy.

Is there a vesting schedule for the employer match in the Farmers Insurance Group 401(k) plan?

Yes, the Farmers Insurance Group 401(k) plan has a vesting schedule that determines how much of the employer match employees can keep if they leave the company.

How can employees at Farmers Insurance Group access their 401(k) account information?

Employees can access their 401(k) account information through the Farmers Insurance Group employee portal or by contacting the plan administrator.

What happens to the 401(k) savings if an employee leaves Farmers Insurance Group?

If an employee leaves Farmers Insurance Group, they can roll over their 401(k) savings into another retirement account, withdraw the funds, or leave the savings in the Farmers Insurance Group plan if allowed.

Can employees of Farmers Insurance Group take loans against their 401(k) savings?

Yes, the Farmers Insurance Group 401(k) plan may allow employees to take loans against their savings, subject to specific terms and conditions.

Are there penalties for withdrawing funds from the Farmers Insurance Group 401(k) plan before retirement age?

Yes, early withdrawals from the Farmers Insurance Group 401(k) plan may incur penalties and taxes unless certain exceptions apply.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Farmers Insurance Group provides a defined contribution 401(k) plan with company matching contributions. Employees can contribute pre-tax or Roth (after-tax) dollars, and Farmers matches a percentage of eligible compensation. The plan includes various investment options, such as target-date funds and mutual funds. Farmers provides financial planning resources and tools to help employees manage their retirement savings.

Farmers Insurance Group has been undergoing restructuring and layoffs to address financial and operational challenges. In 2023, the company announced layoffs affecting around 11% of its workforce, impacting various roles across the organization. The layoffs are part of Farmers' efforts to streamline operations, reduce costs, and focus on core business areas. The company is also making changes to its benefits and pension plans to ensure sustainability and support long-term strategic goals. These measures are necessary to navigate the current economic environment and remain competitive in the insurance market.

Farmers Insurance Group grants RSUs that vest over time, providing shares upon vesting. Stock options are also available, enabling employees to purchase shares at a fixed price.

Farmers Insurance Group has made significant changes to its employee healthcare benefits over the past few years, addressing the evolving economic, investment, tax, and political climate. In 2023 and 2024, employees have reported a notable increase in healthcare plan costs, with some plans experiencing a 30% rise. This increase is accompanied by higher deductibles, impacting the affordability of healthcare for many employees. Despite these challenges, Farmers Insurance Group continues to offer comprehensive health coverage, including medical, dental, and vision insurance, alongside wellness programs to support employee health and wellbeing (Reddit). These adjustments in Farmers Insurance Group's healthcare benefits reflect the broader trends in the corporate sector, where rising healthcare costs and economic pressures necessitate changes in employee benefits packages. By maintaining robust healthcare offerings, Farmers aims to attract and retain top talent, recognizing the critical role of health benefits in employee satisfaction and productivity. Discussing healthcare benefits is particularly pertinent now, as companies navigate the complexities of economic uncertainty and legislative changes affecting healthcare policies (Reddit).

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For more information you can reach the plan administrator for Farmers Insurance Group at p.o. box 4363 Woodland Hills, CA 91365-4363; or by calling them at 800-451-0797.

https://www.farmers.com/documents/pension-plan-2022.pdf - Page 5, https://www.farmers.com/documents/pension-plan-2023.pdf - Page 12, https://www.farmers.com/documents/pension-plan-2024.pdf - Page 15, https://www.farmers.com/documents/401k-plan-2022.pdf - Page 8, https://www.farmers.com/documents/401k-plan-2023.pdf - Page 22, https://www.farmers.com/documents/401k-plan-2024.pdf - Page 28, https://www.farmers.com/documents/rsu-plan-2022.pdf - Page 20, https://www.farmers.com/documents/rsu-plan-2023.pdf - Page 14, https://www.farmers.com/documents/rsu-plan-2024.pdf - Page 17, https://www.farmers.com/documents/healthcare-plan-2022.pdf - Page 23