De Facto Beneficiary

Definition

 
A party who is treated as the beneficiary of a retirement account under the default provisions of the retirement account plan document.
 
A de facto beneficiary usually exists when the retirement account owner either fails to name a beneficiary for his retirement account, or is predeceased by his named beneficiary(ies) and (a) there is no contingent beneficiary and/or (b) no replacement beneficiary is named.
 
Also known as default beneficiary
 
Referring Cite
 
The governing plan document
 
Additional Helpful Information
 
  • For qualified plans and ERISA -403(b) accounts, the de facto beneficiary is usually the surviving spouse of the retirement account owner.
  •  Many plan documents provide for a succession of de facto beneficiaries, in the event that the first line of de facto beneficiary does not survive the retirement account owner.  For example :
o  The spouse is the beneficiary;
o   If there is no surviving spouse, the surviving children are the beneficiaries-Per Stirpes or Per Capita;
o   If there is no surviving spouse or surviving children, the estate of the retirement account owner is the beneficiary.
 
  • Some de facto lines go from spouse directly to estate. Others go directly to the estate; however, this usually is not the case with qualified plans and ERISA 403(b) plans, as the spouse is almost always included in the de facto line.