What’s Happening
On August 7, 2025, President Trump signed an executive order called “Democratizing Access to Alternative Assets for 401(k) Investors.” The order tells the Department of Labor to make it easier for 401(k) plans to offer investments like private equity, real estate funds, and cryptocurrency—investments that have traditionally been available only to wealthy individuals and institutions.
The administration argues that regulatory barriers have unfairly prevented 90 million Americans from accessing these potentially lucrative investments. But there’s a big problem with this logic.
The Legal Problem for Plan Sponsors
Under federal law (specifically ERISA), companies that sponsor 401(k) plans have a legal duty to act like prudent experts when choosing investments for their employees. They must put workers’ interests first and choose investments that are appropriate and reasonably priced.
This becomes nearly impossible with alternative investments because they are:
How can a plan sponsor fulfill their legal duty to choose prudent investments when they can’t properly evaluate what they’re buying?
The Worker Protection Problem
Federal retirement law exists to protect ordinary workers who aren’t investment experts. Most 401(k) participants don’t understand the difference between stocks and bonds, let alone complex private equity structures.
Introducing these sophisticated investments to everyday workers could be disastrous. The promise of “getting rich” in private markets could lead people to put too much of their retirement savings into investments they don’t understand, potentially wiping out decades of careful saving.
There’s also a quality issue: the best private equity deals go to big institutional investors. What’s left for 401(k) plans are likely the investments that sophisticated buyers don’t want.
Legal Risk Hasn’t Gone Away
While the executive order signals political support for these investments, it doesn’t change the underlying legal standards. If workers lose money in alternative investments, companies can still be sued for breach of their legal duties.
The complexity of these investments makes it much harder and more expensive for companies to defend their decisions, requiring:
A Safer Approach
Instead of rushing into complex alternatives, plan sponsors should stick to what works: low-cost, diversified funds that workers can understand, combined with good education about retirement saving basics.
If alternative investments are offered at all, strict protections should be required:
Bottom Line
While giving workers access to more investment options sounds good in theory, the reality is that most alternative investments are complex, expensive, and inappropriate for typical retirement savers.
Companies sponsoring 401(k) plans should be very cautious about adding these investments, regardless of political pressure. Their primary legal obligation is to protect workers’ retirement security, not to provide access to every investment product Wall Street wants to sell.
The safest and most prudent approach remains simple: stick to low-cost, diversified investment options that workers can understand and that have a long track record of helping people build retirement wealth. When it comes to retirement savings, boring is often better.
Disclaimer: The author is an ERISA attorney, not a financial advisor. This article is intended for informational and educational purposes only and does not constitute legal or financial advice. Readers should consult with qualified legal and financial professionals regarding their specific circumstances.
]]>The American people have spoken clearly—69% support marriage equality—yet anti-equality politicians continue their assault on loving families. Justice Clarence Thomas has explicitly called for reconsidering the Obergefell decision, and Republican lawmakers in nine states are actively pushing resolutions urging the Supreme Court to reverse marriage equality, despite knowing this goes against the will of the people.
With 32 states maintaining constitutional bans on same-sex marriage that would become enforceable if federal protections disappear, loving families face having their legal recognition stripped away. If same-sex marriage protections are dismantled, couples could lose spousal recognition, federal marriage benefits, parental rights, medical decision-making authority, and property inheritance protections.
Employee Benefits: My Area of Expertise
In my employee benefits practice, I've seen how devastating it can be when couples haven't properly protected their workplace benefits. Without marriage recognition, your spouse may not automatically access benefits that married couples take for granted.
Health Insurance and Tax Implications Employer-sponsored health insurance represents one of the most immediate concerns. While many employers extend benefits to same-sex partners, federal tax advantages for spousal coverage depends on marriage recognition. If marriage equality is overturned, the tax treatment of your partner's health coverage could change dramatically.
Critical Beneficiary Updates Your employee benefit accounts need explicit beneficiary designations that don't rely on marriage status. For 401(k) and 403(b) plans, federal law typically gives spouses automatic rights, but these protections could disappear. Life insurance through your employer requires specific beneficiary designations—without proper paperwork, benefits could end up in probate or with unintended recipients.
Pension plans present unique challenges with complex spousal benefit elections that must be made during specific time periods. If you haven't made these elections or marriage recognition disappears, your partner could lose significant monthly income for life.
Social Security Vulnerability Social Security represents one of the most significant potential losses. Spousal benefits allow a lower-earning spouse to receive up to 50% of their partner's benefit, and survivor benefits provide substantial monthly income after one spouse dies. These benefits depend entirely on marriage recognition and cannot be transferred through beneficiary designations.
Other Essential Protections: Working with the Right Attorneys
While employee benefits are my specialty, same-sex couples need comprehensive protection across multiple legal areas. I work with experienced attorneys in various fields and can connect families with the right professionals.
Step-Parent Adoption: Your First Priority The most critical protection is step-parent adoption for any children where only one parent has legal rights. This creates a legal parent-child relationship that exists independently of marriage and cannot be revoked. I can refer you to experienced family law attorneys who specialize in LGBTQ+ adoption cases and understand the urgency of completing this process.
Estate Planning and Healthcare Decisions Comprehensive estate planning requires coordination between employee benefits and other assets. Your will should explicitly name your partner as beneficiary, and revocable living trusts can help avoid probate complications. Healthcare powers of attorney grant your partner the legal right to make medical decisions when you cannot and ensure hospital access during emergencies.
Legal Contracts and Property Protection Cohabitation agreements can establish rights and obligations that may not be recognized if federal protections disappear. For real estate, joint tenancy with rights of survivorship provides important protection for your primary residence and other property.
Taking Action Now
Begin immediately by reviewing all your employee benefits and updating beneficiary designations with detailed partner information. Schedule consultations with attorneys for step-parent adoption if you have children, and execute healthcare powers of attorney and estate planning documents.
Maintain comprehensive records of all legal documents with certified copies stored in multiple secure locations. Schedule annual reviews to update documents as laws and circumstances change, and don't wait for political situations to worsen before taking protective action.
Moving Forward with Confidence
While politicians targeting families continue their cruel assault on LGBTQ+ rights, comprehensive legal planning can provide security regardless of political outcomes. In my employee benefits practice, I've seen how proper planning provides not just financial security, but peace of mind that every family deserves.
Preparation isn't about pessimism—it's about empowerment. Every family deserves legal security and recognition. While I cannot control political outcomes, I can offer my expertise in employee benefits law to help LGBTQ+ families protect their workplace benefits, and I can connect you with trusted colleagues who specialize in the other legal protections you need.
The steps outlined here can help ensure that politics will not undermine the legal security that every loving family should have, regardless of what lawmakers defying public opinion attempt to force upon American families.
As an employee benefits attorney and ally, I'm here to help you protect your workplace benefits and connect you with experienced attorneys for other legal needs. Contact me at anneschmidtlaw.com to discuss your employee benefits planning and get referrals to trusted colleagues for comprehensive family protection.
]]>In section seven of the Illinois Uniform Premarital Agreement Act, there are circumstances in which a prenuptial agreement will not be enforceable.[1] This would happen when it causes a party “undue hardship in light of circumstances not reasonably foreseeable at the time of the execution of the agreement”.[2] This means that a court will not hold up a prenuptial agreement if, due to unforeseen circumstances, if it will cause too much suffering for one of the spouses.
1. Undue HardshipThe threshold for undue hardship is relatively difficult to meet. It does not just mean that the spouse will now be in a worse financial position than before. The court defined undue hardship in In re Marriage of Amyette, where it said that when a payee’s fundamental financial insolvency, after divorce, is mathematically demonstrable as being very likely unable to avoid homelessness, or even a life in sub-standard housing, there is an undue hardship.[3]
Despite the sub-standard housing verbiage at the end, the undue hardship burden is hard to prove. Even a drastic change in lifestyle following a divorce can be insufficient. In the case of In re Marriage of Barnes, Sandra Barnes went from being a housewife married to a CEO making over $250,000 a year plus perks to working a clerical job earning $24,000.[4] Even though her household income was now less than one-tenth what it used to be, the court denied her claims of undue hardship.[5] To prove that there is undue hardship, the spouse has to show that they have been left basically destitute by the prenup.
A lack of disclosure is also not a sure bet when trying to prove that a prenup is unenforceable. In the case of In re Marriage of Woodrum, the wife tried to stake her unenforceability claims on the fact that her husband had not provided a full disclosure of all his assets during the agreement.[6] She lost however because full disclosure is not required, there just needs to be a ‘fair and reasonable’ disclosure.[7] As long as the spouse receives sufficient knowledge of the other spouses financial situation, they do not need to be notified of every single asset the other spouse owns.
In order for the prenuptial agreement to be unenforceable, it will likely have to be shown to be unconscionable or agreed to under duress. In In re Marriage of Sarancic, the agreement was unenforceable because of its unconscionability.[8] The court held that it was both procedurally unconscionable and substantively unconscionable.[9] It was procedurally unconscionable because the wife knew limited English and as such did not have a good enough grasp on what she was agreeing to, and it was substantively unconscionable because of how little the wife would be left with in the end.[10] The husband had a net worth between $750,000 and $1 million while the wife did not work.[11] The agreement would give the wife, only because the marriage lasted over 5 years, $30,000, while waiving any property division or maintenance.[12]
2. Reasonably foreseeable
The ‘reasonably foreseeable’ language is just as important as undue hardship when it comes to enforceability. Reasonably foreseeable is less cookie cutter than undue hardship, it is more related to the specific facts of each case. One aspect that can affect how reasonably foreseeable a hardship is, is how reasonably foreseeable a divorce would be in the first place. If it is a young couple that are both being married for the first time, anything in the prenuptial agreement could be argued to be not reasonably foreseeable because the couple is so sure that they will spend the rest of their lives with each other. Meanwhile, if it is the wife’s third marriage and the husbands fourth, it might be harder to claim that a divorce was unforeseeable, even if both of them really are thinking this time is the one. This situation reared its head in In re Marriage of Barnes where it had been the agreement for the husband’s fifth marriage that was being contested.[13] The court stated that this fact made the divorce reasonably foreseeable.[14]
A prenuptial agreement is a contract that can lead to a lot of heartache and a lot of litigation. It can seem like a good insurance policy for someone coming into a marriage with a lot, but it can easily become unenforceable if it leaves their spouse with too little. Plus this nebulous standard gets even murkier when the reasonable provision is added. While the concept of a prenup is simple, the execution can be anything but.
[1] Illinois Uniform Premarital Agreement Act [2] Id. [3] In re Marriage of Amyette, 2023 IL App (3d) 200195, ¶ 29, 471 Ill. Dec. 775, 782, 229 N.E.3d 526, 533 [4] In re Marriage of Barnes, 324 Ill. App. 3d 514, 516, 258 Ill. Dec. 139, 142, 755 N.E.2d 522, 525 (2001) [5] Id. [6] In re Marriage of Woodrum, 2018 IL App (3d) 170369, ¶ 52, 426 Ill. Dec. 99, 118, 115 N.E.3d 1021, 1040 [7] Id. [8] In re Marriage of Sarancic, 2020 IL App (1st) 191817-U, ¶ 39 [9] Id. [10] Id. [11] Id. [12] Id. [13] In re Marriage of Woodrum, 2018 IL App (3d) 170369, ¶ 52, 426 Ill. Dec. 99, 118, 115 N.E.3d 1021, 1040 [14] Id. Joseph Neubauer, Guest Blog Post]]>Breakdown of How Probate Works
The probate process can vary significantly on whether the deceased left a will (testate) or did not leave a will (intestate) and varies depending on the state. However, the steps below are generally as followed:
Effective Strategies to Avoid Probate
Conclusion
By employing these strategies effectively, individuals can significantly reduce or eliminate their estates’ exposure to probate court processes. Engaging a qualified legal advisor not only simplifies the complexities surrounding estate management but also provides peace of mind by ensuring that one’s wishes are honored why minimizing potential delays and costs associated with probate.
[1] London & Lancashire Indem. Co. v. Tindall, 377 Ill. 308, 311-312 (1941). [2] 755 ILCS 5/6-2 Petition to admit will or to issue letters. [3] 2 Illinois Estate Planning § 23.12 (2024) [4] 755 ILCS 5/6-4 Admission of will to probate – testimony or affidavit of witnesses. [5] 755 ILCS 5/6-3 Duty of executor to present will for probate. [6] 2 Illinois Estate Planning § 24.01 (2024) [7] Shakman v. Dep’t of Revenue, 2019 IL App (1st) 182197, ¶27. [8] 765 ILCS 1005/1b [Estate with right of survivorship] [9] 205 ILCS 625/4 Payable on Death Account Incidents. [10] 755 ILCS 27/40 Requirements. Isabella R. Hernandez, Guest Blog Post]]>A rightful concern of many people going through a divorce is what will happen to the retirement they were awarded during the dissolution of their marriage or settlement agreement if a QDRO was not entered in court in a timely fashion; and the participant in the employer sponsored plan passes away before the QDRO is entered into court and processed by the Plan Administrator.
To address this concern, Congress in 2006 passed bipartisan legislation called the Pension Protection Act, detailing in 29 C.F.R 2530.26, “A domestic relations order issued after the Participant’s death, divorce, or annuity starting date, or subsequent to an existing QDRO, will not fail to be treated as a QDRO solely because of the timing of issuance”. While hopeful that this regulation would provide some protection to the alternate payee (the party receiving the share of the retirement), depending on the plan type and property award, a posthumous QDRO might not accomplish the intent of the parties’ Settlement Agreement and leave the alternate payee scrambling in probate in hopes to receive what was assigned to them in the divorce.
For example, let’s say the wife (alternate payee) was assigned 50% of an account with a $200,000 balance as of the parties’ dissolution and no QDRO was entered into court or received by the plan prior to the participant’s death (account holder.) As the plan would have no knowledge of the divorce or property award to the former spouse, upon hearing of the participant’s death, the plan will direct the account balance to be paid the participant’s beneficiaries on file.
This could put the former wife in a difficult situation if she is not included in the participant’s estate forcing her to argue for her awarded share posthumously. To further complicate matters because the plan is subject to ERISA, federal preemption could force the argument into federal court, further delaying and complicating the alternate payee from receiving her awarded share incident to divorce. While life events are not necessarily foreseeable, we do have a few tips to help attorneys and litigants combat post-decree litigation when dealing with posthumous QDROs.
Our office is ready to assist you, no matter the stage of your dissolution. Please reach out early to understand the retirement assets in your marital estate and we can continue to consult and advise as you move through your divorce and finally draft the QDROs and DROs you need to properly assign the benefits to each party.
[1] The assignment of retirement assets incident to divorce is detailed by the agencies and regulations of the Department of Labor (“DOL”), Internal Revenue Service (“IRS”) and federal laws detailed in the Employee Retirement Income Security Act (“ERISA.”) Emma Zurek, Law Clerk Anne Prenner Schmidt, Esq.]]>What does this mean if you were assigned a portion of your ex-spouse participant’s pension in your divorce documents? It means you will first need to enroll your divorce here in Illinois before a Qualified Illinois Domestic Relations Order or QILDRO, which secures your rights to a portion of the pension as an alternate payee, can be accepted and processed by the pension.
To divide the Illinois State Pension, a QILDRO (and in many cases a consent form) is required to be signed and entered in an Illinois state court. Enrolling your foreign judgment (out of state divorce decree) is the first step for an Illinois court to execute and enter your QILDRO.
Our office is here to help effectuate the intent of your dissolution agreement. As a firm that specializes in retirement assignment, we can file your divorce decree from your home state with an Illinois court. This is called a “foreign enrollment.” Enrolling a foreign judgment is to domesticate a judgment entered by a court in another state or country. This will allow the Judgment to be honored as an Illinois judgment and enforceable under Illinois laws. To accomplish this, we make all the necessary appearances, motions, signatures and certifications so the pension can be properly assigned per your out-of-state divorce agreement.
To learn more about this process and what is needed for your Foreign Enrollment, please reach out to us and we will be happy to send you more details.
Cheri McIntyre, MBA, CDFA® Anne Prenner Schmidt, Esq.]]>