Denial of Benefits Governed by Divorce Agreement

Tina Lunsford was designated as the beneficiary for the pre-retirement death benefit in her ex-husband’s company-sponsored pension plan, according to the court document.   Following the death of her ex-husband, Robert Lunsford, the executor of his estate, a prior wife and mother of his three minor children, filed a petition to enforce Tina and Robert Lunsford’s marital dissolution agreement, redirecting the pre-retirement benefits from Tina Lunsford.   The petition was based on language in the agreement saying the Lunsfords waive any right now, or in the future, to each other’s retirement payments or annuities.

The court said the petition was granted by the trial court and a Qualified Domestic Relations Order (QDRO) was entered directing the pre-retirement benefits to be paid to Robert Lunsford’s minor children.

In her appeal, the court said, Tina Lunsford claimed that the Employee Retirement Income Security Act (ERISA) preempts any state law and negates any waiver of benefits.   The appellate court, referencing a 2001 US Supreme Court case, said The Retirement Equity Act of 1984 provides for QDROs to be exempted from ERISA provisions and used to “distribute funds to a payee who was not the primary beneficiary if appropriate under state law.”

The court recognized that the beneficiary form was a contract between Robert Lunsford and his employer to pay the benefit to Tina Lunsford, and that Robert Lunsford never took the appropriate actions under the plan to change his beneficiary.   However, citing language in the marital dissolution agreement that said the waiver would have “the same force and effect as if…she had signed any waiver forms releasing…her aforementioned interest,” the appellate court affirmed the trial court’s decision.

The court’s opinion can be read  here .