GETTING A ROUND TUIT

All of us have more than enough to do. Sometimes there are important things we should do, but we do not get a round tuit. This happened in a recent Supreme Court case.

William Kennedy worked for DuPont and participated in their savings and investment plan. Under the plan, he had the right to designate a beneficiary and change that beneficiary at will.

In 1971 William married Liv and designated her beneficiary under the DuPont plan. In 1994 they divorced, and under the divorce decree Liv was "divested of all right, title, interest, and claim in and to any retirement plan, pension plan, or similar benefit program arising out of Kennedy's employment.

William did not sign any document removing Liv as beneficiary under the savings and investment plan. In 2001 William died, and Kari Kennedy, his daughter, was appointed executrix of his estate.

Kari asked Dupont to distribute $400,000, the proceeds of the savings and investment plan, to William's estate. Relying upon the beneficiary designation in the file, DuPont distributed the $400,000 to Liv.

Kari brought suit in the Federal District Court, which granted judgment for the estate, treating the divorce court judgment as a waiver by Liv. The Fifth Circuit Court of Appeals reversed the decision, stating that the Employee Retirement Income Security Act had established a specific procedure for a spouse to waive benefits under a benefit plan - namely, a qualified domestic relations order, or "QUDRO." Since the decree of the divorce court did not meet the requirements for a QUDRO, DuPont did not have to follow it, and the designation on file governed, even though it was certainly not what William had intended.

The U. S. Supreme Court affirmed the decision of the Fifth Circuit Court of Appeals, noting that ERISA required that a plan be in writing, that ERISA provided a mechanism for a spouse to waive benefits, and that to permit reliance on something other than a QUDRO would place a plan administrator under the burden of having to review a multitude of documents outside of the plan. The estate, and Kari, lost out on the $400,000.

You should review your beneficiary designations under pension plans, insurance policies, or assets, to make sure they will go to the beneficiary you intend. We are familiar with ERISA and other pension requirements, and will be glad to help you.