Deceased Participant Allegedly Murdered by her Primary Beneficiary

[Pammie57]

The Plan Sponsor called me about making a distribution for a deceased participant.  Her boyfriend, who is listed on her DOB as the primary beneficiary, has been arrested and charged with her murder.  He is in custody awaiting his trial.  The deceased participant's family is asking about getting a distribution to help with funeral expenses.   .  I do know there are secondary beneficiaries, but I don't know who they are at this point.  Common sense would tell me that no distribution should be made until the boyfriend is either proven guilty or non-guilty.   If guilty, surely he would forfeit his right to the funds??  However,  I am not a lawyer, so would love to hear from any of you who have dealt with a similar situation.  

 

[QDROphile]

There are several threads about this situation and "killer" statutes.  The plan may need a lawyer to advise about the existence and applicability of such statutes.  ERISA says to pay the designated beneficiary.  ERISA says nothing directly about killer statutes and the statues are state law, which sets up issues about what the plan should do.  The plan is not going to be able to rely on what you may learn from this board; the issues are too complicated.

The plan should also have a lawyer to advise about the appropriate way to address the claims for benefits that have already occurred.  The plan is required to have a claims procedure and the procedure should be followed in response to any request for distribution.  Proper handling of the claim is essential to avoid fiduciary liability.

[ratherbereading]

I did have a plan a long time ago where a participant's wife was convicted for his murder and she was the beneficiary.  The money was paid to her.  

[Peter Gulia]

Based on my experiences (most often as counsel to the decision-maker) with several situations in which a designated beneficiary killed the participant, I’ll tell you that a plan’s fiduciaries often don’t recognize fully how their decisions and communications can get scrutiny from many directions, including not only the named primary beneficiary, a named contingent beneficiary, a default beneficiary, and the personal representative of the participant’s estate, but also the alleged killing’s prosecution and defense lawyers (because either “side” might perceive strategic advantages or disadvantages that turn on whether a defendant has or lacks a right to get money).

 

Even if the plan’s sponsor/administrator has excellent written claims procedures and long experience with flawless claims-handling, a slayer situation might put them to the test.

 

Also, the plan’s administrator should not assume (at least not without its lawyer’s advice) that even a proven slaying would undo the slayer’s benefit.  Unless the plan’s governing document states a provision, there might be no clear rule.

[david rigby]

It's unclear the role played by the original poster.  Don't forget to review the plan provisions.  Other examples of this issue can be found by using the search box above, with "murder" or "slayer".

Nevertheless, advice from QDROphile and FGC is useful.  The Plan Administrator should make sure to discuss with ERISA counsel.  Just my opinion, using ERISA counsel will be preferable to other counsel, because  the ERISA attorney is more familiar with pre-emption issues and may have already researched the slayer statue issues.

[PensionPro]

Recently, the 7th circuit held that ERISA does not preempt the Illinois slayer statute after the plan administrator initiated an interpleader action.  The court determined the slayer statute applied even when the the plan participant's wife was found not guilty by reason of insanity.  Moral of the story:  simply paying the designated beneficiary may not always be the right course of action.

https://tax.thomsonreuters.com/checkpoint-ebia-newsletter/seventh-circuit-erisa-does-not-preempt-slayer-statute-no-plan-benefit-for-spouse-who-killed-participant/

 

[Larry Starr]

You have gotten excellent advice; you need a good ERISA attorney to advise the plan. And possibly the best approach is to consider interpleader (where the whole mess is thrown to the court and the plan either pays the money to the court or waits for the court to decide what to do with the money).  The plan really does not have a stake in the outcome; the plan knows it has to pay out the funds and is indifferent to who is entitled to it.  The ONLY way to be sure of what you do is to have a court tell you what to do. But as noted above, get thee to an ERISA attorney!

[msmith]

You can check the Plan Document. The Document we use has a Slayer statute that states:

"The Administrator may apply slayer statutes, or similar rules which prohibit inheritance by a person whom he or she stands to inherit, under applicable state laws without regard to federal pre-emption of such state laws."

However, I agree, ERISA Counsel should be sought.

 

[Luke Bailey]

To avoid uncertainty, plan documents should specifically include a slayer provision, either their own or incorporate state law, as msmith points out.

If, as often seems to be the case, the plan document does not include a slayer statute provision, then my impression is that, contrary to almost every other area where ERISA preemption has been implicated, the federal courts have by and large found a way somehow to not preempt state slayer statutes. As PensionPro points out, the most recent example of this was in the 7th Circuit. I vaguely recall that there was at least one case years ago that went the other way, maybe at the district court level, but most seem to keep the benefit out of the hands of the wrongdoer.

You should probably interplead to get a court to decide.