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Fidelity paid benefits to wrong beneficiary - how to resolve?

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I'm sure this has happened before.  I'm just not sure how to resolve it.

1) Husband gets divorced and changes 401K beneficiary to his son.

2) Ten years later husband gets remarried, but fails/forgets/decides not to change the 401K beneficiary to his new wife.

3) Husband dies unexpectedly.

4) Son claims benefits, and Fidelity pays him.

Since it appears Federal law allows for the wife to be the beneficiary unless she has signed a waiver allowing for someone else to be the beneficiary, it appears the wife should be able to claim the deceased husband's benefits.  Fidelity claims they can't do anything about it and pushed the issue back to the employer. 

Is anyone able to give any advise on how I should approach unwinding this situation?  Is there any precedent?

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Federal law doesnt "allow" the wife to be the beneficiary, it requires her to be the sole beneficiary if the plan is going to be exempt from the QJSA requirements.

If the participant was married for less than 1 year before his death, the plan is not required to recognize the marriage.

What is Fidelity's role in this that they made the decision about who to pay out? Are they the Plan Administrator?

The SPD will contain information about how to submit an appeal for a claim of benefits. If the widow believes she is entitled to benefits, she should start there.

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It more or less* boils down to Fidelity's role and whether they paid son with the employer/sponsor's approval or whether they had the authority to pay without the sponsor's approval and did so.  

*But I imagine their lawyers will take the position that they have no responsibility either way.  

You're going to need legal help on this.  First step is to wait for the wife to submit a claim.  Then someone** has to ask the son for the money back; it might not be impossible.  

**But this is where the rubber meets the road, or sh*t hits the fan.  If the employer signed off I think you'll have a hard time getting Fidelity to take responsibility.  You're going to need legal help on this. 

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I re-read the original post, and identified the phrase "...advise on how I should approach unwinding this ..."  It appears the original poster has (or thinks he/she has) some personal responsibility for fixing the situation.  Undoubtedly, the advice from Bird (get legal help) is correct, but the first step might be to identify who really does have the responsibility.  

BTW, several readers here will be able to refer to a qualified attorney.

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5 hours ago, Bird said:

It more or less* boils down to Fidelity's role and whether they paid son with the employer/sponsor's approval or whether they had the authority to pay without the sponsor's approval and did so.  

*But I imagine their lawyers will take the position that they have no responsibility either way.  

You're going to need legal help on this.  First step is to wait for the wife to submit a claim.  Then someone** has to ask the son for the money back; it might not be impossible.  

**But this is where the rubber meets the road, or sh*t hits the fan.  If the employer signed off I think you'll have a hard time getting Fidelity to take responsibility.  You're going to need legal help on this. 

The question becomes, did the employer sign? While employer/admin signature is required, some of these custodians 'forget' to get the required authorization.

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20 hours ago, C. B. Zeller said:

Federal law doesnt "allow" the wife to be the beneficiary, it requires her to be the sole beneficiary if the plan is going to be exempt from the QJSA requirements.

If the participant was married for less than 1 year before his death, the plan is not required to recognize the marriage.

What is Fidelity's role in this that they made the decision about who to pay out? Are they the Plan Administrator?

The SPD will contain information about how to submit an appeal for a claim of benefits. If the widow believes she is entitled to benefits, she should start there.

As noted, the spouse is ENTITLED to the benefit; period. She needs to make the claim to the plan.  It is the plan that needs to figure out how to get the money back.  They are the ones who may need to hire the lawyer first, but if she can't get satisfaction from the plan, then she needs her own lawyer.  They may conceivably have to go to court to get the son ordered to pay the money back.  As to  Fidelity's role, as noted elsewhere, it has to be determined who screwed up.  I would expect it was NOT Fidelity; I would expect they were told to make the distribution and it was approved by a plan administrator. If Fidelity was the plan administrator OR did this without instruction, they will need to fix it and it might take a court to order them to do so, but the key is to get the party who screwed up to acknowledge that it's their fault and work on fixing it from there.  The spouse may very well have to hire an attorney, but the above process should be tried first.  You might be surprised as to the results.  

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I appreciate everyone's response.  This situation is kind of messy.

The husband died in May 2019 without a will.  From what I know, the wife at least made an inquiry with the husband's employer and was told the son was the beneficiary.  The son was also the beneficiary on his father's life insurance.  The wife had accepted there was nothing that could be done, and was moving forward in settling the estate with the son.  The lawyer she has been working with did not know she was entitled to the husband's 401K since he was pushing for the estate to be settled.

I got involved a couple of months ago when I was asked to review the estate settlement.  That's when I discovered the wife is entitled to the 401K unless she has signed a waiver regardless of who is named as a beneficiary.

To make matters more difficult, about a year ago the husband and wife adopted a 1 year old child (her grandson) that was having health issues to raise as their own child.  She can use the income the 401K can provide.

The husband's employer has not been helpful.  They passed her off to Fidelity.  Fidelity has not been helpful - they acted like it was not their problem.

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In Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285, 299-304 (2009), the Supreme Court held that retirement plans may rely on the plan terms and beneficiary designation forms in determining the proper recipient of survivor benefits. The ruling resolved a split among the federal courts, many of which had ruled that plans had to recognize the validity of divorce decrees in which a surviving spouse had purportedly waived her right to a survivor benefit from her ex-spouse’s pension plan, even if she remained the designated beneficiary on plan forms after the divorce. Although the Court’s ruling leaves a number of questions unanswered, it does make clear that, in most situations, a plan administrator may now ignore such a divorce decree and pay out a survivor benefit in accordance with the plan’s terms and beneficiary designation forms on file.

It would seem to follow logically that the Plan Administrator acting through Fidelity, most likely the Third Party Administrator, acted property in paying out the 401(k) Plan to the named beneficiary.   

But does the intended beneficiary have the right to pursue the named beneficiary to recoup amounts paid out to the named beneficiary.  The Kennedy court stated in footnote 10, "

""Nor do we express any view as to whether the Estate could have brought an action in state or federal court against Liv to obtain the benefits after they were distributed. Compare Boggs v. Boggs, 520 U.S. 833, 853, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997) ("If state law is not preempted, the diversion of retirement benefits will occur regardless of whether the interest in the pension plan is enforced against the plan or the recipient of the pension benefit"), with Sweebe v. Sweebe, 474 Mich. 151, 156-159, 712 N.W.2d 708, 712-713 (2006) (distinguishing Boggs and holding that "while a plan administrator must pay benefits to the named beneficiary as required by ERISA," after the benefits are distributed "the consensual terms of a prior contractual agreement may prevent the named beneficiary from retaining those proceeds"); Pardee v. Pardee, 2005 OK CIV APP. 27, ¶¶ 20, 27, 112 P.3d 308, 313-314, 315-316 (2004) (distinguishing Boggs and holding that ERISA did not preempt enforcement of allocation of ERISA benefits in state-court divorce decree as "the pension plan funds were no longer entitled to ERISA protection once the plan funds were distributed")." (Emphasis supplied.)

Many appellate decisions have addressed such post distribution suits and have adopted a theory of constructive trust to justify a claim against the named beneficiary (not the Plan Administrator).  But it is first important to note that this is not a clean analogy.  The Kennedy case was premised on the preemption of state law by ERISA in the first instance.  In the situation presented we are dealing with two competing ERISA provisions, one giving the spouse the entitlement to 401(k) Plan proceeds, and the other permitting the Plan Administrator to distribute the proceeds to the NAMED beneficiary. 

In Andochick v. Byrd, 709 F.3d 296 (2013), the United States Court of Appeals, Fourth Circuit, answered the question left open in the Kennedy case, this is, whether an action could be brought against the recipient of life insurance proceeds (or retirement benefits) by reason of having been the named beneficiary of a company plan covered by ERISA, and restore those benefits to the person who equitably should have received such benefits.  The issue was stated by the Court as follows:

“Scott Andochick brought this declaratory judgment action, asserting that ERISA preempted a state court order requiring him to turn over benefits received under ERISA retirement and life insurance plans owned by his deceased ex-wife, Erika Byrd. ERISA obligates a plan administrator to pay plan proceeds to the named beneficiary, here Andochick. The only question before us is whether ERISA prohibits a state court from ordering Andochick, who had previously waived his right to those benefits, to relinquish them to the administrators of Erika's estate.”

The Court held: 
“Finally, as the Third Circuit recently explained when addressing facts nearly identical to those at hand, “the goal of ensuring that beneficiaries ‘get what's coming quickly’ refers to the expeditious distribution of funds from plan administrators, not to some sort of rule providing continued shelter from contractual liability to beneficiaries who have already received plan proceeds.” Estate of Kensinger v. URL Pharma, Inc., 674 F.3d 131, 136 (3d Cir.2012). Permitting a post-distribution suit against a plan beneficiary based on his pre-distribution waiver does not prevent the beneficiary from “get[ting] what's coming quickly.” Rather, as the district court noted, it merely prevents him from keeping what he “quickly” received. Thus, we conclude that permitting post-distribution suits accords with the ERISA objectives discussed in Kennedy.”  (Emphasis supplied.)

There are many other cases with similar holdings.  The issue in the instant case may be whether or not Fidelity was deemed to be on notice that the Participant was married at the time of his death, or was required to make that inquiry before paying out the 401(k) account to the son.  I think not. 

If the son is successful in secreting the funds in question in his brother-in-laws corporate account in Tierra del Fuego, then the case of In Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, 136 S. Ct. 651, 193 L. Ed. 2d 556, 577 US __ , (2016), may become pertinent.  In that case the Supreme Court held that pursuant to 502(a)(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), a Plan Administrator may not recover overpayments from a Participant’s general assets.  The decision impacts both retirement and health and welfare plans.  Is this applicable to the instant case?  Who knows.

An interesting situation.    

David

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14 hours ago, fmsinc said:

In Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285, 299-304 (2009), the Supreme Court held that retirement plans may rely on the plan terms and beneficiary designation forms in determining the proper recipient of survivor benefits. The ruling resolved a split among the federal courts, many of which had ruled that plans had to recognize the validity of divorce decrees in which a surviving spouse had purportedly waived her right to a survivor benefit from her ex-spouse’s pension plan, even if she remained the designated beneficiary on plan forms after the divorce. Although the Court’s ruling leaves a number of questions unanswered, it does make clear that, in most situations, a plan administrator may now ignore such a divorce decree and pay out a survivor benefit in accordance with the plan’s terms and beneficiary designation forms on file.

It would seem to follow logically that the Plan Administrator acting through Fidelity, most likely the Third Party Administrator, acted property in paying out the 401(k) Plan to the named beneficiary. 

I disagree.  I'm no lawyer but this didn't make sense to me so I reviewed the case...ok, I read a review of the case.  I believe that drawing an inference from that case to this situation is not valid.  The Kennedy case was one where an ex-spouse gave up her right to any pension benefits as part of a divorce settlement.  But the participant did not change the beneficiary designation which named her as the primary beneficiary.  Both she and the estate filed claims and the plan decided she was the beneficiary.  I won't get into the legal reasoning but it went to the Supreme Court and they sided with the plan - she was the beneficiary because the beneficiary designation said she was, and a separate document waiving her rights had no impact.

The first sentence of the (Trucker Huss) review said:  "In a victory for plan sponsors and administrators, the Supreme Court ruled recently in Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, 129 S.Ct. 865 (2009), that retirement plans may rely on the plan terms and beneficiary designation forms in determining the proper recipient of survivor benefits."  (My emphasis in bold.)  Plan terms in the instant case say wife is beneficiary.  No ifs and or buts; the designation signed by the participant before the marriage is simply invalid.

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Your analysis of Kennedy is correct.  It dealt with the preemption of state law by Federal law, ERISA.  That is why I said: 

"But it is first important to note that this is not a clean analogy.  The Kennedy case was premised on the preemption of state law by ERISA in the first instance.  In the situation presented we are dealing with two competing ERISA provisions, one giving the spouse the entitlement to 401(k) Plan proceeds, and the other permitting the Plan Administrator to distribute the proceeds to the NAMED beneficiary."

I have not located a case that addresses that exact situation.  One section of ERISA says that the spouse is entitled to benefits on the death of the Participant.  Kennedy says the Plan may pay the beneficiary named on the form sitting in the Plan's file.  Which takes priority?  There are plenty of questions that need to be addressed and answered:

(i) Keeping in mind that we have multiple players: (i) the Plan Administrator; (ii) the Third Party Administrator acting as agent for the Plan Administrator; (iii) the surviving spouse; (iv) the son as named beneficiary, what court has jurisdiction to adjudicate the issue - State or Federal?  What will be the anticipated cost of litigating this issue?  

(ii) Inasmuch as the surviving spouse has the ability to file a post distribution suit against the son to recoup the 401(k) proceeds that should have been paid to the surviving spouse, isn't the surviving spouse in a position to be made whole indirectly, thereby making the issue moot? A basic rule of appellate practice is that if the court doesn't have to decide an issue to resolve the case it will not do so.   NB:  Appellate court rulings don't generally take into account the difficulty or impossibility of the winning litigant to actually collect the damages to which he/she is entitled?  For example, in  Dexter v. Dexter, 105 Md.App. 678, 661 A.2d 171 (1995) [the essential holding of which was superseded by Howell] the husband signed an Agreement giving his ex-wife a portion of his military retired pay.  Thereafter he waived a portion of that retired pay in order to receive tax free VA disability benefits.  The CSA held that the husband had breached the Agreement and that the measure of damages was what the ex-wife would have received but for the breach.  Not addressed was the need for the ex-wife to file multiple suits from time to time in order to obtain judgments on which she could execute, and the difficulty of collecting such judgments.   

(iii)  On whom should we place the blame?  Let's assume the Plan had 100,000 participants and that Fidelity had no idea that the Participant was married at the time of his death?  What if the Fidelity form submitted by the son to Fidelity requesting payment did not ask whether the Participant was married at the time of his death?  What if the Fidelity form did include such a question and the son said "no"?   What if he said "no" because he didn't know his father had re-married? 

Let's assume the son opted for a direct taxable distribution (less withholding) and either secreted the money it in a bank in a numbered account in the Cayman Islands, or paid a visit to Las Vegas and lost it all at the craps table. Let's assume that the Participant intended to leave his 401(k) account to his son and that he and the spouse had discussed it and she said, "Of course honey.  I understand your desire to take care of the child from your former marriage. That's okay with me", but never signed a consent or a waiver? 

Attached find a FAQ Sheet issued by the EBSA.  It provides in pertinent part, "If you were single when you enrolled in the plan and subsequently married, it is important that you notify your employer and/or plan administrator and change your status under the plan."  Why is this "important"?  What if you don't do so?  What does this mean? What are the consequences of not doing so?  What is the applicable IRC or CFR provision that prompted this comment?   

Was there an antenuptial agreement, or a postnuptial agreement, or a marital settlement agreement, or a Joint Last Will and Testament, wherein waiver language might be found?  Did Fidelity provide notice to anyone of the application be the son to receive the 401(k) account proceeds?   

 Should the decedent get a pass for failing to change the beneficiary?  Would it have mattered?  

There are lots of questions that need be answered before you can fault Fidelity for paying the 401(k) to the named beneficiary?  

Keep in mind that none of the QDRO or "former spouse" cases can be cited as authority for the issue at hand.  In 32 years of preparing QDROs and acting as an expert witness I have never some across a case with this set of facts - surprising so.  I would love to be directed to a case on point.    The law should be clear.  Too often it is not.  One and one should always = 2. Sometimes it equals 3.25.  

***One matter not addressed in the question presented was how long the parties had been married when the Participant died?  Some retirement plans provide that a spouse of a participant will not be treated as married unless he or she has been married to the participant for at least a year.  See 26 CFR 1.401(a): 

"Q-26: In the case of a defined contribution plan not subject to section 412, does the requirement that a participant's nonforfeitable accrued benefit be payable in full to a surviving spouse apply to a spouse who has been married to the participant for less than one year?

A-26: A plan may provide that a spouse who has not been married to a participant throughout the one-year period ending on the earlier of (a) the participant's annuity starting date or (b) the date of the participant's death is not treated as a surviving spouse and is not required to receive the participant's account balance. The special exception described in section 417(d)(2) and Q&A 25 of this section does not apply."

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”

― John Adams

David      

ESBA FAQ.pdf

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39 minutes ago, fmsinc said:

In the situation presented we are dealing with two competing ERISA provisions, one giving the spouse the entitlement to 401(k) Plan proceeds, and the other permitting the Plan Administrator to distribute the proceeds to the NAMED beneficiary."

This is missing @Bird's point.  The present case is not dealing with two competing ERISA provisions, the designation of the son as the beneficiary became invalid when the father remarried.  

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Do we have any idea why in the face of this magical beneficiary change that occurred on the participant's marriage Fidelity nevertheless paid out the money to the son?  My point was that more facts are needed.

My cynicism is born of 53 years of practicing law where it is inevitably true that there is more to be known about every situation before reaching a conclusion. Clients almost never tell their attorneys everything.

AsI pointed out, we don't even know whether or not the parties had been married for a year at the time of the husband's death.  As much as I hate working with Fidelity, I'm not willing to assume that they had sinister motives in paying the money to the son instead of the spouse.  I'm not even willing to assume that the marriage between the parties was a valid marriage.  

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I think we all agree that more facts are needed, my point was that we don't have competing provisions or two people with a valid claim.  These things happen because:

1) someone screwed up

2) someone lied

3) 1&2

Who screwed up or lied is anyone's guess at this point

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6 hours ago, RatherBeGolfing said:

This is missing @Bird's point.  The present case is not dealing with two competing ERISA provisions, the designation of the son as the beneficiary became invalid when the father remarried.  

I agree that the Kennedy case is not on point and the theory doesn't apply to this set of facts as presented to us.

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Will you agree that we don't actually know ALL of the facts necessary to formulate an intelligent and fully informed response? 

Will you agree that the "facts as presented to us" are not necessarily the facts that were presented to the attorneys for Fidelity, and that we don't know why Fidelity did what they did? 

Would you agree that it might be more prudent to wait until radublu finds out ALL of the facts before expressing an opinion? 

What exactly has this thread provided that might be useful to radublu?  Any case law?  Any statutes or CRF regs or learned treatises or law review articles? 

Who should be sued, and on that legal or equitable theories, and in what judicial system, and for what relief?   

You may be right about Kennedy and I will maintain an open mind; but I deal with the LAW as set forth in statutes and/or by the courts. I need something I can point to and hang my hat on.  Hubert Humphrey once said that "The right to be heard does not include the right to be taken seriously."  That applies to all of us.  I want to see something authoritative from a Court or in the law before I concede and apologize, or gloat.      

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3 hours ago, fmsinc said:

Will you agree that we don't actually know ALL of the facts necessary to formulate an intelligent and fully informed response? 

There are plenty of intelligent responses, but we dont have all the facts we need for a complete answer.  Like most threads, it's a give and take between the OP and the people who respond.  

 

3 hours ago, fmsinc said:

Will you agree that the "facts as presented to us" are not necessarily the facts that were presented to the attorneys for Fidelity, and that we don't know why Fidelity did what they did?

Of course.  No one is blaming Fidelity.  We dont even know that Fidelity had their attorneys involved, it could an administrative mistake. 

3 hours ago, fmsinc said:

Would you agree that it might be more prudent to wait until radublu finds out ALL of the facts before expressing an opinion?

Not really.  Like many posts here, the OP doesn't necessarily know what facts to look for or what questions to ask to get those facts.  Most of the back and forth in these threads is part of the process to get the facts. 

3 hours ago, fmsinc said:

What exactly has this thread provided that might be useful to radublu?  Any case law?  Any statutes or CRF regs or learned treatises or law review articles? 

This thread has gotten more facts from OP.  It has provided OP with direction to get more facts relevant to the situation, like what Fidelity's role was.  It has informed OP that the wife needs to submit a claim, and probably needs legal representation from someone who specializes in this part of the law. 

I'm all for case law, statutes, and regs.  But if we don't have the full picture, how can we provide OP sources that are relevant?

3 hours ago, fmsinc said:

You may be right about Kennedy and I will maintain an open mind; but I deal with the LAW as set forth in statutes and/or by the courts.

Your conclusion from Kennedy seems to be that since a divorce decree waiving a benefit does not automatically void a beneficiary designation filed with the plan, a participants subsequent marriage shouldn't automatically void a beneficiary designation either. This is incorrect. The problem is that if the plan is exempt from the QJSA requirements (which OPs fact pattern suggests), the spouse is required to be 100% beneficiary unless he/she waives that benefit.  The marriage supercedes the prior beneficiary designation.  It is no longer valid.  If the plan pays out a benefit based on the beneficiary designation that preceded the marriage, it is NOT acting according to the terms of the plan, which is a crucial element in Kennedy.

 

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12 hours ago, fmsinc said:

AsI pointed out, we don't even know whether or not the parties had been married for a year at the time of the husband's death.  .... I'm not even willing to assume that the marriage between the parties was a valid marriage.  

 

What part of "They were married three years." leads you to discount the statement's validity or justifies your doubt as to the marriage's validity? Making up scenarios that directly contradict what appears to be simply facts presented by the OP is hardly helpful to this OP or to anyone who might read this thread in the future

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Thank you, Mike.  I missed the follow-up email saying that the parties were married for 3 years.   Mea culpa

Since these messages tend to be truncated, I have attached my comments in a PDF document. 

We are all a product of our life experiences.  My very first case as a lawyer involved filing suit on behalf of a physician for breach of a contract with a 3 doctor medical practice to employ him at a certain salary and for a certain period of time.  They terminated his employment early and refused to pay the severance pay that was also part of the contract.  During their depositions I asked the three doctors routine questions including where the attended college and medical school.  Their demeanor didn't pass my personal smell test and I checked with the medical schools, and, lo and behold, they had not attended or graduated from those schools or any other medical schools.  They were complete frauds who were what we used to call "fat doctors" who didn't need to affiliate with any hospitals that might have closely investigated their credentials.  To my client's credit, he was willing to forego any possibility of recovering on his claim, and agreed to turn the so-called "doctors" in to the police to protect their patients.  They were all convicted of multiple offences and went to jail.    

On another occasion I was sitting in court waiting for my client's trial for speeding, reckless driving, hit and run of parked cars, driving while intoxicated, driving while his license was revoked, going through multiple stop signs and red lights, and turning out lights to avoid identification - basically every moving violation in the Code that did not involve death.  I was convinced that he was going to jail.  While waiting for the case to be called I was thumbing through the Maryland Code and came across a little section at the end that said, "No case shall the tried except upon a Summons containing an affirmation of the arresting officer."  "Affirmation" means "I solemnly swear the that contents of this document are true and accurate to the best of my knowledge, information and belief".  I looked at the stack of Summonses that my client had received and no such language was present.  When the case was called I moved to dismiss the charges.  The judge not only dismissed my client's charges, but all of the charges against the 100 or so people waiting for their trial.  The MVA changed the form within a week and added the affirmation language.   To avoid being charged again, my client left Maryland and never returned.   [I know what a bad thing you think I did by helping this guy escape punishment for his many crimes.  But that was MY JOB. Truth and justice is found in our adversary system, like it or not.]

What you guys are talking about is what we learn in law school - "don't fight the facts".  But that applies only to hypothetical situations presented for testing purposes.  If you don't fight the facts in you own case you can be sure that your opponent will do so, and the Judge also.  The concept underlying cross examination is to ask what, where, who, when, why, how, how much.  Lawyers who don't do this are sued for malpractice and a violation of the Code of Professional Responsibility.   

In Howell v. Howell the Supreme Court held that a state court may not order a veteran to indemnify a divorced spouse for the loss in the divorced spouse's portion of the veteran's retirement pay caused by the veteran's waiver of retirement pay to receive service-related disability benefits. It was clear however that the Justices were wholly unfamiliar with divorce law.  For example, they failed to clearly distinguish between "retired pay" as "property" and suggested that an adjustment could be made if "retired pay" was viewed as "income" that is, alimony, or that an adjustment could be make with respect to other marital property.  Said the Court: 

""We recognize, as we recognized in Mansell, the hardship that congressional preemption can sometimes work on divorcing spouses. See 490 U. S., at 594. But we note that a family court, when it first determines the value of a family’s assets, remains free to take account of the contingency that some military retirement pay might be waived,or, as the petitioner himself recognizes, take account of reductions in value when it calculates or recalculates the need for spousal support. See Rose v. Rose, 481 U. S. 619, 630–634, and n. 6 (1987); 10 U. S. C. §1408(e)(6)."  (Emphasis supplied.)

They also failed to distinguish between VA disability pay on he one hand and Combat Related Special Compensation and disability retirement pursuant to Chapter 61 of 10 USC §1201 et seq., on the other hand.  Neither of the latter two would meet the criteria set forth by the Supreme Court in Howell.  There are very many courts that have found loopholes in Howell

So I for one am not willing to assume that my interpretation of the law or your interpretation of the law is the final word on the subject.   There will be a case, or an obscure section of ERISA or REA or the PPA, or a section in CFR, that will change the predicted outcome, sometimes for nonsensical reasons.  Good lawyers never accept the proposition that 1 + 1 = 2 all the time.  Yes, Kennedy dealt with Federal preemption of State law in a divorce situation.    Here are 35 Federal opinions that address 29 USC 1104(a)(1)(D) - https://scholar.google.com/scholar?q="29+USC+1104(a)(1)(D)"+"surviving+spouse"&hl=en&as_sdt=20000003&as_ylo=2009&as_yhi=2020

In Metlife v. Akpele, the 11th Circuit Court of Appeals held: 

"This court likewise holds as mandated by the Supreme Court in Kennedy that a party who is not a named beneficiary of an ERISA plan may not sue the plan for any plan benefits. A party, however, may sue a plan beneficiary for those benefits, but only after the plan beneficiary has received the benefits. See Kensinger, 674 F.3d at 132."

Based on this there would seem to be no claim against Fidelity. 

In IBEW v. Lee, the court stated: 

Wayne identified Lois as his spouse, but the validity of that designation appears to be incorrect. Mississippi, the state in which Wayne and Lois married, observes a presumption in favor of the validity of a successive marriage, but that presumption may be overcome with evidence that the first marriage was not dissolved by divorce or annulment. Dale Polk Const. Co. v. White, 287 So.2d 278, 279 (Miss. 1973); United Timber & Lumber Co. v. Alleged Dependents of Hill, 84 So.2d 921, 924 (Miss. 1956). Washington and Tennessee maintain the same rule.[3] Wash. Rev. Code § 26.04.020(1)(a); Seizer v. Sessions, 915 P.2d 553, 559 n.22 (Wash. Ct. App. 1996), rev'd on other grounds, 940 P.2d 261 (Wash. 1997); Guzman v. Alvares, 205 S.W.3d 375, 381 (Tenn. 2006)."

 But IBEW v. Lee did cite Moore v. Philip Morris - https://scholar.google.com/scholar_case?case=5264085434229152959&q="29+USC+1104(a)(1)(D)"+"surviving+spouse"&hl=en&as_sdt=20000003&as_ylo=2009&as_yhi=2020

decided 15 years before Kennedy, where the decedent wife named her children as beneficiaries of her company sponsored life insurance with the intention of excluding her adulterous husband.  The US Court of Appeals held: 

 

"In order to rectify certain inequities arising under ERISA regulated plans, REACT amended ERISA by, among other things, "providing for `automatic survivor benefits to the spouses of vested [ERISA plan] participants.'" Heisler v. Jeep Corp.-UAW Retirement Income Plan, 807 F.2d 505, 509 (6th Cir.1986) (quoting S.Rep. No. 575, 98th Cong., 2d Sess. 12, reprinted in 1984 U.S.Code Cong. & Admin. News 2547, 2558). REACT established the following criteria for waiver of benefits by the participant spouse:

Each plan shall provide that an election [by a plan participant to waive plan benefits] shall not take effect unless —
(A)(i) the spouse of the participant consents in writing to such election, (ii) such election designates a beneficiary (or a form of benefits) which may not be changed without spousal consent (or the consent of the spouse expressly permits designations by the participant without any requirement of further consent by the spouse), and (iii) the spouse's consent acknowledges the effect of such election and is witnessed by a plan representative or a notary public....

29 U.S.C. § 1055(c)(2)(A)(i); see also 26 U.S.C. § 417(a)(2).

"In this case, although Lillian D. Beard designated her three children as beneficiaries of the Philip Morris deferred profit sharing plan, James R. Beard, Lillian's husband, never gave his consent to that election. Thus, given the clear and unambiguous terms of the statute, we conclude that only he is entitled to the benefits of the plan. See Hurwitz v. Sher, 982 F.2d 778, 781 (2d Cir.1992) (applying plain meaning of REACT in holding that surviving spouse entitled to proceeds of ERISA plan absent properly executed consent), cert. denied, ___ U.S. ___, 113 S.Ct. 2345, 124 L.Ed.2d 255 (1993); Donohue v. Shell Provident Fund, 656 F.Supp. 905, 908-09 (S.D.Tex.1987) (same); Binks Mfg. Co. v. Casaletto-Burns, 657 F.Supp. 668, 671 (N.D.Ill.1986) (same), aff'd in part and dismissed in part, 822 F.2d 1090 (7th Cir. June 15, 1987)."

29 USC 1104 was not mentioned in the opinion and it appears that that section may not have been added until 2006 with the PPA  (More research needed.) 

David

 

  

FMS Message 3-28-2020.pdf

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