Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Employment Law No. 01-0447, 6/19/2003. Click here for the full text of this decision FACTS: An ERISA pension plan participant designated his wife as the plan’s primary beneficiary. The couple later divorced, and, in an agreement incorporated in the divorce decree, the former wife waived any interest in the plan, agreeing that it would be the participant’s sole property. When the participant died some 13 years later without changing his beneficiary designation, the former wife and the participant’s alternative beneficiary lodged competing claims to the plan proceeds. HOLDING: Affirmed. The court of appeals held that ERISA pre-empted the state redesignation statute, but nonetheless applied that statute’s express terms as federal common law. The court reaffirmed its analysis in a subsequent opinion denying rehearing after the Supreame Court issued Egelhoff v. Egelhoff, 532 U.S. 141 (2001), stating that “our conclusion that federal law controls is supported by Egelhoff.” The court agrees that Egelhoffsupports the conclusion that federal common law controls, but disagrees with the court of appeals’ formulation of federal law as a mere conduit for applying individual state statutes. Such an approach presents the same obstacles to national uniformity that ERISA pre-emption was designed to prevent, requiring plan administrators to determine complex choice-of-law questions, and then to interpret and apply varying state laws. This approach also differs significantly from the one that the majority of federal circuit courts have applied in deciding this issue. While those courts have sometimes looked to state statutes governing the disposition of marital property to inform the analysis, they have gone beyond the statutes to develop a body of common law that recognizes a former spouse’s waiver of ERISA plan benefits in a divorce decree dividing the marital estate so long as it is specific, knowing and voluntary. The federal courts’ formulation of common law in this area, which ERISA’s text does not address, does not interfere with nationally uniform plan administration, and the court applies it here. Patsy argues that ERISA’s anti-alienation provision precludes giving effect to her waiver. Under that provision, “[e]ach pension plan shall provide that benefits provided under the plan may not be assigned or alienated.” 29 U.S.C. �1056(d)(1). But the circuit courts that have specifically addressed this issue have agreed that this provision applies to the plan participant and does not apply to a beneficiary’s waiver. These courts have reasoned that the anti-alienation provision is “a spendthrift device intended to ensure that employees’ accrued benefits are available for retirement.” Estate of Altobelli v. Int’l Bus. Machines Corp., 77 F.3d 78 (4th Cir. 1996). The provision is intended “to safeguard a stream of income for pensioners (and their dependents),” not to bar a waiver in the pensioner’s favor. Guidry v. Sheet Metal Workers Nat’l Pension Fund, 493 U.S. 365 (1990). The court does not believe that applying the federal common law of waiver implicates or interferes with ERISA’s anti-alienation provision. To the extent that Heggy v. Am. Trading Employee Ret. Account Plan,56 S.W.3d 280 (Tex. App. – Houston [14th Dist.] 2001, no pet.), conflicts with this opinion, the court disapproves it. OPINION: O’Neill, J.; Phillips, C.J., Enoch, Schneider and Smith, JJ., join. DISSENT: Hecht, J., Owen, Jefferson and Wainwright, JJ., join. “The plans make no provision for a beneficiary’s waiver of benefits. These terms are consistent with ERISA’s definition of a beneficiary as ‘a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.’ It should follow, therefore, that ERISA requires pension plans to be administered so that the beneficiary is the person designated by the participant in writing to the plan provider unless it would be inconsistent with other ERISA provisions or the aims of the statute to do so. State law – a divorce decree, a statute, or any other law – that would alter this requirement is preempted, as the United States Supreme Court recently held in Egelhoff v. Egelhoff,and as we recognized in Barnett v. Barnett. Thus, Frank Weaver’s designation of his then-wife Patsy Keen could not be changed by Texas law based on their decree of divorce, their agreement incident to divorce, or section 9.302 of the Family Code that invalidates, with certain exceptions, pre-divorce designations of beneficiaries of retirement plans.”

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.