Beneficiary Determination

[Nassau]

My client is unsure of who legally should be the correct beneficiary in the following situation and would like our legal guidance: A participant changed their beneficiary on-line from their spouse to their sibling in April 2011. The participant passed away this month and now the spouse has come forward as the beneficiary. In reviewing the account we found that the spouse is not listed as the beneficiary, and in reviewing the death certificate we see that the participant and his spouse were separated. This would mean that the participant changed the beneficiary on-line without proper authorization from his spouse by selecting that he is not married (which is not true). Would the account still go 100% to the spouse? The client is concerned that because they were separated that it should not be given to the spouse and would like our legal opinion.

[rcline46]

If you are an attorney, then you can give an opinion based on the VERY limited exceptions to spousal beneficiary (which is usually in the document). If you are not an attorney, do not under any circumstance do more that point out the section in the document.

[Peter Gulia]

Nassau, guessing that your purpose is to help the plan’s administrator, you might suggest that the administrator include in its information-gathering asking its lawyer for advice about whether a separated spouse is a spouse for survivor-annuity or spouse’s-consent purposes.

At least a few courts have found that no matter how long a separation continues, a marriage does not end until a court orders the divorce.

Example: In 1984, Barbara and Alfred separated. In 1986, Alfred sued for divorce. In 1991, Alfred died. A divorce had not been ordered. Despite seven years’ separation, Barbara was Alfred’s wife until his death. Although the plan had previously paid distributions, she was entitled to the survivor portion of the QJSA that would have been paid in the absence of her consent. Davis v. College Suppliers Co., 813 F. Supp. 1234 (S.D. Miss. 1993).

Example: Ben married Wessie in 1954, separated from her in 1957, and lived with Adelaide until his death in 1989. The woman who lived with Ben for about 32 years got nothing, and the legal wife of about 3 years got all death benefits. Hernandez v. Igloo Prods. Corp. Retirement Plan, 868 F. Supp. 200 (S.D. Tex. Houston Div. 1994).

Even a finding of fact that the spouse abandoned the participant is irrelevant. In re Lefkowitz, 767 F. Supp. 501, 508 (S.D.N.Y. 1991), affirmed sub nom. Lefkowitz v. Arcadia Trading Co. Ltd. Defined Benefit Pension Plan, 996 F.2d 600, 16 Employee Benefits Cases (BNA) 2516, Pension Plan Guide (CCH) ¶  23880Z (2d Cir. 1993).

Other cases that involve “who’s the spouse” questions include: Grabois v. Jones, 89 F.3d 97, 20 Employee Benefits Cases (BNA) 1505 (2nd Cir. 1996); Central States, S.E. & S.W. Areas Pension Fund v. Gray, 31 Employee Benefits Cases (BNA) 1748, 2003 U.S. LEXIS 18282 (N.D. Ill. Oct. 8, 2003); Croskey v. Ford Motor Co.-UAW, 2002 U.S. Dist. LEXIS 8824 (S.D.N.Y. May 2, 2002).

If a plan’s administrator makes a discretionary decision on whether a participant did or did not have a spouse, the administrator should follow ERISA’s claims-procedure rules, obtain information necessary to evaluate the claims and other questions presented, obtain and consider its lawyer’s advice, compile a sound administrative record, explain its decisions, and further act with care so that a court may defer to the administrator’s decisions. See, e.g., Blessing v. Deere & Co., 985 F. Supp. 899–907 (S.D. Iowa 1997).

Please understand that the information above is general and is not advice to anyone. Also, I haven’t checked it recently.