Pension Protection Act Blog

When a participant dies before filing for legal separation or divorce from their spouse, who is entitled to the participant’s benefits under the plan? The Sixth Circuit Court of Appeals recently addressed this situation in Greenebaum Doll v. Sandler, Nos. 06-6494, 06-6496 (6th Cir. Dec. 3, 2007).

In Greenebaum, the participant died three days after informally separating from his wife. At the time of death, neither the participant nor his spouse had filed for legal separation or divorce. The plan designated the participant’s surviving spouse as the default beneficiary and permitted a participant to designate a beneficiary other than the spouse if the spouse consented in writing to a specific beneficiary; the spouse’s written consent was witnessed by a member of the plan’s retirement committee or acknowledged before a Notary Public; and the spouse’s written consent had to acknowledge the effect of such consent. The plan also provided that no change in beneficiaries was effective until the plan’s retirement committee received a new designation of beneficiary. When the participant died, the plan’s retirement committee had received no designation of beneficiary from the participant, so the surviving spouse was the default beneficiary under the plan’s language.

Before the participant and spouse were married, they executed a prenuptial agreement which “waive[d] and release[d] any claim, demand or interest in any pension, profit-sharing, Keogh or other retirement benefit plan qualified under ERISAS and the Internal Revenue Code of the other party and agree[d] to execute any documentation to verify and confirm this fact with the administrator of such plan.”

After the participant died, the spouse and the participant’s children from a previous marriage asserted conflicting claims for the benefits held by the plan. The children filed a cross-claim against the spouse, asserting that she breached the prenuptial agreement by claiming an interest in the participant’s retirement assets and by failing to execute any instrument or document necessary to waive her interest in the participant’s benefits.

The Sixth Circuit upheld the district court’s decision awarding the participant’s benefits under the retirement plan to the spouse. The Sixth Circuit reasoned that a prenuptial agreement by itself does not satisfy ERISA’s spousal consent requirement, and the language in this prenuptial agreement specifically did not satisfy ERISA’s spousal consent requirement. Therefore, the spouse was entitled to the participant’s retirement assets as the default beneficiary under the terms of the plan. Even though the participant and spouse signed a prenuptial agreement calling for the spouse to waive any claim to the retirement benefits if they divorced, the prenuptial agreement did not preclude the spouse from receiving the retirement benefits if the participant died first.

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