Ask the Lawyer received the following question (paraphrased for easier reading and clarity) from a reader on a legal matter that might be of interest to the entire audience.
My brother passed away in 2010. He was a federal employee. He was divorced in 1993 but never changed his beneficiary. At the time of his death, his ex-wife was still listed as the beneficiary for his pension. In the divorce degree both parties signed away any right to retirement benefits. When my brother passed away, his ex-wife agreed that she had no claim to the pension and submitted a disclaimer to the Office of Personnel Management (OPM). OPM denied the disclaimer. My brother’s ex-wife refuses to claim the money and disburse it to the rightful heirs. Is there any recourse for me to take to get OPM to disburse the funds to the rightful heirs?
A designation of beneficiary trumps a divorce decree in the event of a death, even if a separation or divorce from that designated beneficiary occurred and the beneficiary designation remained unchanged by the plan’s participant. The Supreme Court of the United States has ruled that a divorce decree does not waive an ex-spouse’s rights to retirement benefits if the beneficiary designation remained unchanged post-divorce and named the ex-spouse as the beneficiary. See Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, 555 U.S. 285 (2009). Thus, an ex-spouse’s waiver of a right to the participant’s pension benefits in a divorce decree does not invalidate the participant’s beneficiary designation made in accordance to the pension plan.
To avoid this result, plan participants should check the beneficiary designations of their retirement account and pension plan to ensure that the designated beneficiary assigned is the person the participant wants to receive the retirement account or pension in the event of a death.
Bill Bransford is managing partner of Shaw, Bransford & Roth, PC.
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