Before the laws of ERISA dictated the responsibilities of retirement plan fiduciaries, Mary Chichester du Pont—part of one of the richest families in U.S. history—created an employee pension trust that, decades down the line, became the center of controversy.

Du Pont established the trust, formerly titled the U.S. du Pont Pension and Retirement Plan, in September 1947 to pay an annual pension equal to 60% of wages to retired domestic employees and any employees who provided secretarial, accounting or other assistance to du Pont family members.

Fast forward to 2016, and Helena du Pont Wright and James Mills—two of Mary Chichester du Pont’s grandchildren—sued Elton Corp., First Republic Trust Co. of Delaware and Gregory Fields, alleged fiduciaries of the Mary Chichester DuPont Clark Employee Pension Trust, for refusing pensions to certain of their personal employees. Their requests and associated litigation have led to a court deciding that the plan is subject to the Employee Retirement Income Security Act of 1974 and ordering family members to cover millions in liabilities.

Both Wright and Mills employed domestic employees they claim are entitled to benefits under the trust. At least 13 former employees have been approved for pensions under the trust by the defendants and are currently receiving pensions.

The case includes Joseph Wright and T. Kimberly Williams, added as plaintiffs in 2019 and currently employed by James Mills and Helena du Pont Wright as a personal assistant and a personal accountant, respectively. According to the lawsuit, both employees provide the type of personal services the trust states would entitle them to a pension, and both have been employed for at least the 10 years the trust’s terms state are required to trigger a pension.

The trust states that eligible beneficiaries continue to receive payments until the earliest of 20 years after the death of the last surviving grandchild who was living at the time the trust was executed or until the entire “corpus of the trust and all additions thereto and all income accrued thereon were exhausted.”

Until the 2016 suit, however, the trust and its provisions had not been treated like a pension plan covered by ERISA. Each family member with covered employees was defined as a “qualified employer.” The trust was funded with 50 shares of DuPont stock, which had grown to 112,772 shares in 1999, worth about $7.4 million. The trust has current assets of about $2.7 million, according to the lawsuit.

When du Pont’s grandchildren filed the lawsuit in 2016, it prompted the question: Does the trust fall under ERISA?

Even though the trust was created before 1974, when ERISA became law, the U.S. District Court for the District of Delaware ruled in 2019 that it does apply, as there is no exception for pre-existing programs.

The defendants—the trust’s fiduciaries—did not dispute that the trust is a plan, as defined in ERISA, but they contended it is nonetheless not covered by ERISA.

“The facts show that establishing the Trust was not a single, aberrational occurrence but reflects a calculated commitment to provide pension benefits to qualified former, present and future employees on a regular and long-term basis from 1947 to the present day,” a June 2019 court opinion stated.

Because the court found that ERISA applies to the DuPont trust, it also ruled that the plan trustee and all du Pont family members with employee participants in the program are considered plan fiduciaries.

As a result, these plan fiduciaries breached their duties under ERISA in a variety of ways.

There are currently 246 known potential plan participants and beneficiaries—active, terminated or retired—to whom liabilities are owed. In total, the trusts’ liabilities are between $37 million and $38 million. Under ERISA’s funding requirements, the plan must immediately be funded.

Additionally, all plan fiduciaries are “jointly and severally liable” for all the plan’s liabilities. This means that each fiduciary, including Helena du Pont Wright and James Mills, who filed the 2016 suit on behalf of their employees, is fully liable for the entire amount.

In March 2023, the defendants argued there is a provision in ERISA that does not require the funding of trusts that pre-date ERISA. However, U.S. Senior District Judge Joseph Bataillon rejected that argument and appointed a special master—an independent businessperson or lawyer—to hold the defendants’ feet to the fire and report back to the judge.

The special master and staff will be paid by the plan fiduciaries, with an initial retainer of $100,000, according to the complaint.

Drew McCorkle, a vice president and financial adviser at CAPTRUST who is not associated with the case, says it should serve as a warning sign to plan fiduciaries.

“It’s important to be aware of whether or not the benefit you offer is covered by ERISA, because … you don’t want to accidentally create something that is subject to that regulatory framework and not realize it,” McCorkle says.

According to the lawsuit, ERISA generally applies to any private sector employee benefit plan if it is established or maintained:

1. By an employer engaged in commerce or in any industry or activity affecting commerce;
2. By any employee organization(s) representing employees engaged in commerce or in any industry or activity affecting commerce; or
3. Both.