By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Litigation Attorney
In Part 1 of this series I reviewed the importance of your beneficiary designation to your retirement benefit account(s). In this post I will discuss an example of just how important this action is.
William Kensinger designated the proceeds of his pension fund to go to his wife, Adele Kensinger. The couple divorced in 2008, and the Property Settlement Agreement (PSA) between the two parties stated that both would waive any future interest they might have to the other’s IRA and/or other retirement accounts. Unfortunately, William neglected to change the beneficiary of his pension plan after his divorce and before his death in 2009. A dispute arose over who would receive the funds. The ex-wife moved for summary judgment, claiming the proceeds as her own as the named beneficiary, while the Estate cross-moved for summary judgment, stating that the property settlement agreement was a valid contractual waiver and the proceeds belonged to the Estate. The District Court held that the ex-wife should be given the benefits as the named beneficiary of the pension plan based on the decision, which was never appealed. But the question that was appealed in this case was whether a claim can be made against the ex-wife after she receives the pension benefits because she waived them in the property settlement agreement under the divorce.
The District Court held that there was a protected right by the ex-spouse after benefits are distributed to her. The Court stated that the ERISA statutory scheme provides certainty requiring the final distribution of ERISA benefits, and that to provide a cause of action to recover benefits already dispersed was contrary to the purpose of ERISA. But this is not the end of the dispute. You’ll be surprised at the final ending in my next post.
To discuss your NJ Estate Planning matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at firstname.lastname@example.org. Please ask us about our video conferencing consultations if you are unable to come to our office.