Association of Career Employees

Law Changes ETF Beneficiaries

Six years ago, ACE wrote the Department of Employee Trust Funds to request that the “Standard Sequence” for ETF benefits (including life insurance, death benefits, and Deferred Compensation) be changed. The ‘standard sequence” is used for employees or annuitants who die and have not filed a beneficiary designation form. ACE asked that the ETF standard sequence be made consistent with Wisconsin’s law of intestate succession. (Intestate succession governs the distribution of an estate when the individual has died with a will—intestate.)

ETF agreed to pursue a statutory change to provide that if benefits should go to a child, but the child is deceased, the benefit would go in equal shares to the child’s children (the deceased’s grandchildren). Previously, the benefits went to the child’s living spouse, who was not related by blood to the deceased. ACE contacted ETF periodically to check on the status of this proposal. The provision eventually became part of an ETF technical bill, which was sponsored by Sen. Wirch and Rep. Jeskewitz, co-chairs of the Joint Survey Committee on Retirement Systems. The bill was enacted into law as 2007 Act 131, and took effect in April of 2008.

However, ETF declined to pursue another change. Under the intestate succession law of Wisconsin, and of most states, if a deceased lives a surviving spouse and children from another relationship, the surviving spouse inherits half of the marital property, and the other half goes to the individual’s children in equal shares.

Under the ETF standard sequence, the surviving spouse receives all the ETF benefits, without regard to children from another relationship. ETF indicated that it would be difficult to obtain information about stepchildren from the surviving spouse, and payments might be delayed.

Therefore, employees or annuitants who wish to follow normal inheritance law for that situation should file an Alternate Beneficiary Designation form (call 1-877-533-5020 or (608) 266-3285 to request this form). The instructions on the back of the form are lengthy, but do not clearly explain how to follow normal inheritance law. People with questions about how to fill out the form may call (608) 264-7900.