In the Pursuit of Domestic of Domestic Tranquility - Matrimonial Attorneys Should Follow The Bouncing Beneficiary Designations

In 2009, the Supreme Court, in Kennedy v. Plan Adm’r for DuPont Sav. and Inv. Plan, addressed the proper identification of beneficiaries under plans governed by the Employee Retirement Income Security Act of 1974, as amended (ERISA). Kennedy identifies the ‘‘plan documents’’ rule (Plan Documents Rule) as the legal doctrine that controls the inquiry regarding beneficiary identification for ‘‘pension plans’’ and ‘‘welfare plans’’ governed by ERISA. The Plan Documents Rule presents an extremely bright-line standard for identifying to whom the plan administrator must pay plan benefits. Generally, the inquiry starts and stops with the identification of who is designated as the applicable beneficiary under and in accordance with the terms of the governing plan. However, Kennedy, in a footnote, raised a question as to whether a claimant may have a cause of action against a named beneficiary to whom benefits have been paid in accordance with the governing plan documents.

The point of this Article is neither to endorse nor criticize Kennedy’s adoption of the Plan Documents Rule or any other aspect of the case. Rather, the point is to identify, in light of Kennedy, the risks and potentially disastrous consequences of a failure to attend to beneficiary designations, and the remarkable ease with which, with simple action, those risks can essentially be eliminated.

Reproduced with permission from Tax Management Compensation Planning Journal, Vol. 43, No. 3 p. 43, 03/06/2015. Copyright 2015 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com.