We’re in the midst of a great wealth transfer, with baby boomers expected to pass an estimated $106 billion to younger generations through 2048.
But receiving an inheritance may prove complicated for some beneficiaries. (1) Only 44% of boomers have a will, according to Trust & Will’s 2025 Estate Planning Report. (2)
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And that’s just one potential challenge. It’s not unusual for pension owners and beneficiaries to feel lost amid the maze of rules, regulations and frequent changes surrounding pension inheritance and beneficiary designations.
Take the case of Dave, a hypothetical middle-aged man whose widowed father died 10 years ago. He left 50% of his 401(k) to Dave and 50% to his estranged brother, Cameron. Dave hasn’t spoken to Cameron in 15 years. When their father died, neither he nor the pension administrator could find him.
Recently, Dave was notified that his brother, who had been in a nursing home, had died. His death certificate lists him as married with no children, though Dave heard from a family friend that Cameron was also estranged from his wife too.
Now Dave is wondering if he’s entitled to the other half of his dad’s pension.
Taking the first step
In cases like this, it’s typically best to consult a lawyer — especially if the deceased lived in another state or didn’t have a will.
Pensions are governed by federal laws, while state laws are aimed primarily at retirement plans for state employees. Inheritance law is handled at the state level, but taxes can involve both state and federal laws. So, it’s complicated — and navigating it alone can be tough.
Dave doesn’t necessarily have a clear-cut right to Cameron’s half of the pension.
If a plan has a single beneficiary, the plan owner can also name a successor or contingent beneficiary. That person inherits the plan if the primary beneficiary dies before the plan owner or declines the inheritance.
If there are multiple named beneficiaries, and one of them dies before the plan owner, the deceased beneficiary’s share is split equally among the remaining beneficiaries. However, the plan summary may outline a different way of handling this situation.
Because Cameron was alive when their father died, the only way Dave could have inherited his brother’s share is if Cameron explicitly declined it. Since the plan administrator never contacted Dave, that’s unlikely.
Dave can try to find out whether Cameron’s share was paid out, but that won’t be easy — and he may know.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Other considerations
Whether Dave inherits any of his brother’s assets will depend on whether Cameron was still legally married. Depending on the stipulations in his will, his wife could inherit everything.
It could also depend on whether his brother had a will. If he did, he might have left the pension inheritance to Dave. But in some states, a surviving spouse is entitled to that money regardless, while in others, inheratances may be exempt from automatically going to the spouse.
If Cameron wasn’t still married, didn’t have a will and his assets went to probate — meaning they’re distributed according to state laws — Dave might be entitled to some or all of the inheritance because he’s next of kin.
As can often be the case with an inheritance — especially when no will is involved — things can get messy. If you ever find yourself in a situation like Dave’s, legal guidance is almost alway a must.
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Article sources
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Merrill (1); Trust and Will (2).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.