Several recent appellate decisions clarified the rights that current spouses, former spouses and other persons have in a participating spouse's IRA, pension fund, and life insurance policies. For ease of discussion within this article, these types of accounts will collectively be termed a "fund," though it must be noted that there are innumerable legal distinctions between IRA's, pension plans, life insurance policies, etc.

There are two main ways through which a current or former spouse can claim an interest in a participating spouse's fund. If the parties are still married, part or even all of the fund may be marital property under Maryland law, and the current spouse may claim part of the fund solely on the basis of being married to the participating spouse. Also, a person, whether a current spouse, a former spouse, or a person with no present or former marital relationship with the person participating in the fund, can claim an interest in the fund if the participating spouse named that person as beneficiary. Under Maryland law, although the parties' property may have been distributed as part of the divorce, a divorce does not automatically terminate or affect a former spouse's interest in a fund if the former spouse is a named beneficiary.

Often in a pre-nuptial agreement, post-marital agreement, or in a marital property settlement agreement, the parties will waive or otherwise address their interests in one or more funds. It is important to note, however, that, unless a waiver is properly drafted, what controls a current or former spouse's interest in the fund often is whether he or she is a named beneficiary of the fund at the time of the participating spouse's death. If a spouse-to-be validly waives his or her potential interest in a fund in a pre-nuptial agreement, that spouse never acquires a marital interest in the fund, and is not entitled to any part of the fund unless the participating spouse-to-be names the spouse as his or her beneficiary. Similarly, if a spouse validly waives his or her interest in the fund in a marital agreement, whether post-marital or as part of a separation agreement, that spouse waives his or her marital interest in the fund, so that any interest that he or she may have had is extinguished. The key, therefore, is to ensure that waivers are valid and comply with all relevant laws.

A waiver of a spouse's marital interest in a participating spouse's fund must be carefully crafted to avoid the pitfalls contained within state and federal law. For example, many pension plans are governed by ERISA, and IRA's are governed by certain Internal Revenue Code provisions, both of which are complex federal laws in their own right. A waiver also must be carefully constructed to accommodate the fact that a spouse generally does not have a legally recognized claim to the plan until the participating spouse is deceased. The waiver must thus contain broad provisions waiving past, present and future (also called expectancy) interests in the fund.

Even if the above-discussed waiver is valid, a former or current spouse may still claim an interest in the fund if, despite the pre-nuptial or marital agreement, the participating spouse has named that spouse as a beneficiary. In other words, if a current or former spouse has waived his or her interest in the fund in an agreement, but, for whatever reason, is still a named beneficiary at the time of the participating spouse's death, the spouse may still retain an interest in the funds despite the waiver. To protect one's estate and one's heirs, therefore, a participating spouse must make sure that the beneficiary has been changed with the fund administrators. In addition, in most instances, a waiver should be drafted to include a waiver of the spouse's rights to claim under the plan as a named beneficiary, not just as a spouse, and to bind the administrators of the plan to this decision.

The best advice is to retain experienced legal counsel in drafting pre-nuptial, post-marital, and separation agreements regarding funds. One should also ensure that the named beneficiary reflects one's current wishes and are updated quickly to accommodate any changes in the planning of a person's financial affairs. To change beneficiaries, the paperwork governing the change should be executed as soon as reasonably possible, and one should follow up with the plan administrators governing the fund to confirm that any change in beneficiary has been effectuated.