Post-Death Domestic Relations Order is Qualified for ERISA Purposes

Todd, a Denver Post employee, participated in two pension plans. When he and his wife Barbara divorced in 1988, Todd disclosed only one of those plans (the disclosed plan), and the other (the second plan) was omitted from the negotiations and settlement. According to a Qualified Domestic Relations Order (QDRO), Barbara was entitled to one-half of that portion of the disclosed plan attributable to their 13 years of marriage.

Todd died in 1999. Barbara, as his personal representative, discovered the second plan and assumed Todd had inadvertently failed to disclose it during their divorce proceedings. She filed a motion for entry of a nunc pro tunc QDRO to correct the mistake retroactively to a date before Todd’s death, for the explicit purpose of meeting the requirements of ERISA. The motion was granted, giving Barbara one-half interest in the second plan as of the day after the divorce.

However, the plan administrator refused to recognize the QDRO since it was entered after Todd’s death. He argued that the order was not “qualified” under ERISA because it would provide “increased” benefits to Barbara. Barbara insisted that if the effect of the court’s order was to make the transfer of benefits effective before Todd’s death, then nothing in ERISA precludes that order from being a QDRO with any WY resident agent. 

The Federal District Court for the District of Colorado agreed with Barbara and held that the QDRO was “qualified.” The court ordered the plan administrator to recognize Barbara’s interest as a surviving spouse.

Source:Patton v. Denver Post, et al., CA No. 00-K-1860 (F

Legal Lines

Attorney in facts Greed Overshot Her Authority

Date:1/25/2002

William Reynolds died in 1997, leaving four children to squabble over the division of his property and distribution of his estate in California. Two months before his death, William executed a general power of attorney, designating one of his children, Cynthia, as his attorney in fact. The power of attorney specifically granted Cynthia authority to create a trust on William’s behalf but did not grant her power to change his designation of beneficiaries to receive any of his property.

The day before William died, Cynthia created an inter vivos trust in his name and executed it as both trustor and trustee. The trust provided that William’s home was to be held in trust for Cynthia for life and that the remainder would go to William’s grandchildren, effectively bypassing William’s other three children. The trust also provided that the rest of William’s property was to be divided equally between the four children, but the home was the only asset of the trust.

Understandably, Cynthia’s siblings objected and filed a complaint for declaratory relief and constructive trust. They contended the trust was void to the extent it purported to provide a life estate in the property to Cynthia with the remainder to the grandchildren. William had executed a will in 1988 distributing all of his property equally to his children, and Cynthia, though she did have the power to create the trust, did not have the power to change the beneficiary designations set forth in the will.

The California Court of Appeal, Fourth Appellate District, agreed and declared the trust invalid.

Source:Schubert v. Reynolds, Cal.App.4d, 1-10-2002