Frequently Asked Questions

Employee Ownership FAQs

Common questions about employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and other forms of employee ownership, from the basics to technical topics.

This FAQ is written primarily for business owners, managers, and advisors involved in setting up or running an employee ownership plan. If you're an employee at an ESOP company looking to understand your own benefits and rights, see our articles on Working at an ESOP Company and The Rights of ESOP Participants.

NCEO employee ownership FAQ hero (keyboard)

How do employees handle assignment of their ESOP benefits to someone else?

Under current law, a plan participant's beneficiary will automatically default to a spouse (assuming at least one year of marriage precedes death) unless a different beneficiary is designated by the participant on forms provided by the plan administrator. Any designation by a married participant (again assuming at least one year of marriage) that designates a beneficiary other than the current spouse will be void unless it is accompanied by the certified (or notarized) consent of the spouse to their designation. This designation must specifically acknowledge the waiver of the spouse's rights to benefits. Any such consent will not be binding on any future spouse.

Link to this FAQ Topic: Distributions & Repurchase