Family Law

The U.S. Supreme Court has issued a unanimous decision in a pension case that pitted an ex-wife against the pensioner's daughter.

Mr. Kennedy (the pensioner) was an employee of DuPont and participated in their savings and investment plan (SIP) that was an ERISA benefit plan. In 1971, Mr. Kennedy married and three years later signed a beneficiary designation identifying his new wife, Liv Kennedy, as the sole beneficiary of the SIP plan. Twenty years later, the couple divorced. As part of the divorce, the ex-wife agreed to relinquish all rights to husband???s pension benefits with DuPont. The agreement to waive those benefit was contained in the divorce decree. However, a Qualified Domestic Relations Order was not submitted covering these benefits nor did the husband ever change the beneficiary designation for the account.

In 1998, Mr. Kennedy retired from DuPont and later died in 2001. His daughter was appointed administrator of his estate. She sent a letter to DuPont requesting the Estate be paid the funds in the SIP. DuPont refused, stating that the beneficiary designation identified the ex-wife as the beneficiary. She also asked the ex-wife (her Mom) to relinquish her rights to the account and she refused. In fact, ex-wife asked DuPont to pay up and they sent the ex-wife the $400,000.00. Daughter, on behalf of the Estate, brought a lawsuit.

The United States Supreme Court said that a QDRO was not needed to eliminate a person's right to a benefit plan. Rather, the key was the beneficiary designation form and the procedures set up under the plan. The plan set up a procedure for the husband to designate a new beneficiary and he did not. The plan also set up a procedure for the ex-wife to waive her right to benefits, and she did not. Therefore, the employer had to pay the benefits as stated in the original beneficiary designation form no matter what the divorce decree stated. Thus, ex-wife gets the benefits and daughter does not.

What is the lesson learned? If you divorce, you must ensure that your designated beneficiary forms under any pension and/or retirement plan covered by ERISA are changed. You must make the change yourself following the rules given by your employer. Do not rely on a waiver of benefits in a divorce decree or QDRO. Change the beneficiary form or it could result in unintended consequences at your death--your ex-spouse getting your benefits.

Please click here for the entirety of a great article by Robert M. Kisselburgh on his Mississippi Family Law Blog.

Please be sure to visit www.hardinglaw.com, the website for the law firm of Harding & Associates, for more information on California family law.