Key Points
- Intent alone isn't enough to change beneficiaries on retirement plans. Courts require both clear intent and positive action that closely mirrors the plan’s required procedures.
- Plan procedures must be followed precisely. ERISA requires strict adherence to plan documents, and courts will not honor beneficiary changes made through informal channels like faxes or verbal requests if the plan specifies a different procedure.
- Proactive steps are essential to protect your family. Review beneficiary designations after major life events, follow plan procedures exactly, obtain written confirmation, and act promptly.
After a divorce, most people assume that updating their benefits is as simple as sending a quick message to HR. A recent federal appeals court decision demonstrates just how costly that assumption can be and why working with experienced estate planning counsel is essential to protecting your assets and your family.
The Cautionary Tale of Carl Kleinfeldt
In a decision issued by the United States Court of Appeals for the 7th Circuit on Feb. 2, 2026, the court addressed what happened when a plan participant attempted to change a retirement account beneficiary but failed to follow the plan’s required procedures.
Carl Kleinfeldt worked for the Packaging Corporation of America for approximately 32 years and participated in the company’s retirement plan. When he married Dená Langdon in 2006, he designated her as the sole primary beneficiary of his retirement account with his sisters named as contingent beneficiaries.
After the couple divorced in September 2022, Kleinfeldt did what many people would consider reasonable: He had his secretary send a fax to the PCA Benefits Center requesting that his ex-wife be removed as a beneficiary from his 401(k), pension and life insurance accounts. The fax clearly stated his intent, and PCA even responded by removing Langdon from his health, vision and dental insurance. However, for the retirement account, PCA merely changed Langdon’s status from “spouse” to “ex-spouse” but did not remove her as the primary beneficiary.
When Kleinfeldt passed away in January 2023, his ex-wife was still listed as the primary beneficiary and the court ultimately ruled that she was entitled to the funds.
Why the Fax Wasn’t Enough: The Substantial Compliance Doctrine
Under the federal common law doctrine of “substantial compliance,” a change in beneficiary may be honored even if the plan participant did not perfectly follow every procedural requirement but only if the participant both evidenced a clear intent to make the change, and undertook positive action that is “for all practical purposes similar to” the action required by the plan’s change of beneficiary provisions.
The court had no trouble finding that Kleinfeldt clearly intended to remove his ex-wife as a beneficiary as the fax unequivocally expressed that desire. However, intent alone is not sufficient.
The critical failure was in the second element. The plan’s documents specifically instructed participants to contact the PCA Benefits Center by phone or update their beneficiaries online. Nowhere in the plan documents was a participant permitted to request a beneficiary change via fax. By sending a fax instead of following the prescribed procedures, Kleinfeldt’s method “deviate[d] materially from the Plan’s terms and [fell] short of being ‘for all practical purposes similar to’ the procedures required by the plan documents.”
Significantly, Kleinfeldt’s own fax acknowledged that additional steps might be required as he requested that PCA “fax any necessary paperwork” that he might need to complete. The court noted that this demonstrated that Kleinfeldt understood that further steps may have been necessary, yet he never followed up.
What Courts Have Found Sufficient and Insufficient
The 7th Circuit’s decision helpfully contrasted cases where substantial compliance had been found with those where it had not been found:
Substantial compliance found
- Participant completed the required change-of-beneficiary form but made minor clerical errors (wrong address, wrong marital status) before returning it to the employer.
Take away: Using the correct form and following the proper procedure even imperfectly can satisfy the doctrine.
- Participant completed the required form and returned it to the administrator, who accepted and processed it; the only failure was not signing and dating the form.
Takeaway: Technical omissions on a properly submitted form may be excused as "carelessness."
- Participant completed all sections of an enrollment form as instructed by the employer’s cover letter; however, the employer had failed to mark the beneficiary section with an “X” as it should have.
Take away: When the employer’s error contributes to the oversight, courts may find substantial compliance.
Substantial compliance NOT found
- Participant simply told a co-worker he intended to remove his ex-wife as beneficiary but never obtained or completed the required change-of-beneficiary form.
Take away: Mere verbal expressions of intent, without any attempt to follow plan procedures, are insufficient.
- Participant informed an insurance agent by telephone of his desired change; the agent incorrectly told him the change was already in place, so he never completed the form.
Take away: A telephone conversation does not suffice as a “positive act,” and failure to attempt the required form is fatal.
Why This Matters for Your Estate Plan
This case is not an isolated incident. Under ERISA, plan administrators are “obliged to act in accordance with the documents and instruments governing the plan” and receive no exemption from this duty when it comes time to pay benefits. The Supreme Court has emphasized that ERISA provides participants with “a clear set of instructions for making his own instructions clear” and that this framework “forecloses any justification for enquiries into nice expressions of intent, in favor of the virtues of adhering to an uncomplicated rule.”
In other words, what you intend matters far less than what you actually do and whether you do it correctly.
Protecting Your Family: Practical Steps
The lessons from this case apply broadly to retirement accounts, life insurance policies and other beneficiary-designated assets governed by ERISA.
Consider the following:
- Review your beneficiary designations regularly and especially with life changing events: marriage, divorce, the birth of children, or the death of a loved one should prompt an immediate review of all beneficiary designations.
- Follow plan procedures exactly. Contact the benefits center or use the online portal as specified in your plan documents. Do not assume that emails, faxes or verbal requests will be honored.
- Obtain written confirmation. After submitting any beneficiary change, request written confirmation that your change has been processed and is reflected in the plan's records.
- Coordinate with your estate plan. Beneficiary designations operate independently of your will. An experienced estate planning attorney can help ensure your beneficiary designations align with your overall estate plan and are properly executed.
- Don’t delay. Kleinfeldt's fax requested that any necessary paperwork be sent to him, but he died before taking further action. Procrastination can have devastating consequences.
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