If you have ever opened up any kind of account with a financial institution, you will be asked to name a beneficiary. The beneficiary will be the person who will receive the account, if you pass away. If you are married, you will likely choose your spouse to be the beneficiary of that account.
If you subsequently get divorced in Illinois, your ex-spouse’s beneficiary designation is not completely undone by an Illinois divorce.
You may be awarded the entirety of an asset but your right to give away that asset remains…even to your ex-spouse.
“Illinois case law pertaining to nontrust property assigned to one party after a divorce, where the ex-spouse is still named as the primary beneficiary, distinguishes two distinct types of interests. One interest is ownership interest, the ability to do with the property as one wishes. The second interest discussed is an expectancy or beneficial interest. Expectancy is defined as ‘the interest of a person who merely foresees that he might receive a future beneficence, such as the interest of an heir apparent… or of a beneficiary designated by a living insured who has a right to change the beneficiary.’ ” (Emphasis added.) Deida v. Murphy, 271 Ill. App. 3d 296, 299 (1995) (quoting In re Marriage of Weinstein, 128 Ill. App. 3d 234, 244 (1984)).
If you really own something, you have the right to give it away to whomever you choose. Complete ownership of an asset means you can leave that asset to your ex-spouse through a beneficiary designation.
“Because having the right to do whatever one wants with property includes the power to direct, “After I die, A shall become the owner,” there is no inconsistency between an ownership interest in one person and an expectancy interest in someone else. This power of after-death disposition is a stick in the brush pile of ownership. Being awarded property, such as an account, means gaining the ability to control who will be the new owner after one dies (and either changing one’s mind inter vivos or not changing one’s mind about the after-death beneficiary).” Mowen v. Kelly, 2025 IL App (4th) 240906
To illustrate, in one case, Robert E. Leahy owned some real estate on North Clark Street in Chicago. He put the property in a land trust, naming his wife, Margaret K. Leahy, as the contingent beneficiary in case he died. Robert and Margaret afterward divorced. The judgment of dissolution provided that Robert would ‘retain as his property, free and clear of any claim whatsoever by [Margaret], the [Clark Street property].’ Later, when Robert died, the land trust was still in effect, and he had not terminated Margaret’s contingent beneficial interest. The question was whether, in the judgment of dissolution (the terms of which were consensual), Margaret had “specifically waive[d] her contingent beneficial interest in the land trust.” The appellate court concluded that the answer was no. All that the agreed-upon judgment of dissolution stipulated was that “Robert was to retain the property free of any claim of [Margaret].” The appellate court pointed out, “[Margaret’s] contingent beneficial interest was not a claim on the real property but an expectancy interest because Robert was free to change the contingent beneficiary.” Therefore, absent any language in the judgment of dissolution providing otherwise, Margaret “remained the contingent beneficiary at the time of Robert’s death,” and Margaret “was entitled to the proceeds from the sale of the real property.” Leahy v. Leahy Schuett, 211 Ill. App. 3d 394 (1991)
Again, owning an asset means having the power to award that asset to an ex-spouse or not to change the beneficiary of that asset.
“[B]y agreeing to the award of retirement accounts to the decedent, [the surviving ex-spouse] did not waive any expectancy interest in the accounts. [The surviving ex-spous’se] expectancy interest—which the decedent, as owner of the accounts, remained free to terminate—had no tendency to contradict or diminish [the deceased’s ex-spouse’s] ownership. Rather, only by virtue of [the deceased’s ex-spouse’s] ownership (and [the deceased’s ex-spouse’s] act of refraining, as the owner, from changing the contingent beneficiary) did [the surviving ex-spouse’s] continue to have an expectancy interest.” Mowen v. Kelly, 2025 IL App (4th) 240906
Unless a Marital Settlement Agreement specifically waives the beneficial interest, an ex-spouse’s beneficiary designation will stand after an Illinois divorce.
To illustrate, in one case, Jeffrey Hill participated in a profit-sharing plan offered by his employer. Jeffrey Hill named his wife, Colleen Hill, as the primary beneficiary of the plan. The subsequent divorce decree provided that Jeffrey was to “have as his own, free of any interest of [Colleen], his interest in the profit-sharing plan.’ ” The Eighth Circuit agreed with “[a] number of courts” that “the spouse’s rights as a beneficiary are extinguished only by terms specifically divesting the spouse’s rights as a beneficiary under the policy or plan.” Id. By “[giving] Jeffrey his entire interest in the Plan free of any interest of Colleen,” the divorce decree “did not…specifically refer to and modify the beneficiary interest.” Because the divorce decree “did not revoke the beneficiary designation,” Colleen was “entitled to the Plan benefits.” Lyman Lumber Co. v. Hill, 877 F.2d 692 (8th Cir. 1989)
The Illinois appellate courts are replete with counter-examples where the ex-spouse waived their beneficial interest along with their ownership interest in an account.
In one Marital Settlement Agreement it was agreed that “[E]ach of the parties hereto does hereby forever relinquish, release, waive, and quitclaim to the other party all property rights and claims which he or she now has or may hereafter have… in or to or against the property of the other party or his or her estate, whether now owned or hereafter acquired by such other party.” Herbert v. Cunningham, 2018 IL App (1st) 172135 ¶ 46
Based on the Marital Settlement Agreement’s language, the appellate court found that “the divorce decree unambiguously expressed the parties’ intent to waive all present and future interests in each others’ property, including [the ex-spouse’s] interest in the decedent’s 401(k) account.” Hebert v. Cunningham, 432 Ill. Dec. 321, 333 (Ill. App. Ct. 2018)
Why Do We Think A Divorce Extinguishes All Interests In An Awarded Asset?
This concept that a divorce does not automatically divest an ex-spouse of all possible interests in property awarded to the other spouse is because assets held in trust for the benefit of an ex-spouse are automatically divested.
“Unless the trust instrument or the judgment of judicial termination of marriage expressly provides otherwise, judicial termination of marriage of the settlor of a trust revokes every provision that is revocable by the settlor pertaining to the settlor’s former spouse in a trust instrument or amendment executed by the settlor before the entry of the judgment of judicial termination of marriage of the settlor and any such trust shall be administered and construed as if the settlor’s former spouse had died upon entry of the judgment of judicial termination of marriage.” 760 ILCS 3/605(b)
Unless the asset was explicitly held in a trust, an Illinois divorce will not extinguish an ex-spouse’s beneficiary interest.
“Absent evidence of a trust, section 605(b) of the Illinois Trust Code (760 ILCS 3/605(b) is inapplicable.” Mowen v. Kelly, 2025 IL App (4th) 240906
After an Illinois divorce, all parties would be well served to review the beneficiaries to their accounts. Otherwise, after death, they may be giving up assets to their ex-spouse they were awarded in the divorce.
To learn more about how to be sure all your i’s are dotted and your t’s are crossed during and after your Illinois divorce, contact my Chicago, Illinois family law firm to schedule a free consultation with an experienced Illinois divorce attorney.
