You are not done with your divorce related tasks just because you and your spouse have signed a Separation Agreement. There are many important documents that need to be reviewed and revised after the Separation Agreement is signed to effectuate the terms of your agreement. These can include life and health insurance policies, pension documents, Deeds, Wills and other important legal documents. Failure to make the changes to these documents contemplated by your Separation Agreement can have serious consequences. The 4th Circuit Court of Virginia has refused to enforce waivers contained in a Separation Agreement – even after the Separation Agreement became part of a Final Decree of Divorce -- because the insured did not change her beneficiary designation before she died. This resulted in her ex-husband being permitted to keep the life insurance proceeds paid out by wife’s ERISA-approved plan despite his signing of a separation agreement waiving any claim to benefits from wife.
In Boyd v. Metropolitan Life Insurance Company, the wife had worked for an airline before her untimely death. Her employee life insurance plan allowed her to change her beneficiary at any time by sending a signed, dated written request to the carrier. The plan made clear that the carrier would disburse benefits to her estate, but it did not specify any procedure for beneficiaries to follow in order to waive their claims to benefits. Wife and husband separated six years after wife designated husband as her beneficiary on her plan. During the following divorce, a South Carolina Court entered their separation and property settlement agreement, which included the waiver “the right to receive proceeds, funds or property as a beneficiary under any life insurance policies.” However, the wife never changed the name of the beneficiary and the plan’s carrier paid the proceeds to husband. The appellants filed suit, and later, this appeal.
The 4th Circuit has made it very clear that plan documents, not the divorce decree, are controlling on disbursements under a pension plan. So don’t forget to change YOUR beneficiaries!
