Other Matters

Divorce and Beneficiary Designations

Egelhoff v. Egelhoff, 532 U.S. 141 (2001).


Husband named Wife as the beneficiary of a life insurance policy and pension plan which were both governed by ERISA. After getting divorced, Husband failed to remove Wife as the beneficiary before he died. Washington law automatically removed Wife as beneficiary of these contracts upon divorce. The Washington statutes are similar in effect to Family Code §§ 9.301 & 9.302. The Supreme Court of Washington determined that ERISA did not preempt state law on this point and thus Wife was not entitled to the proceeds of these contracts. Wife appealed.

The United States Supreme Court reversed holding that ERISA preempted state law and thus the ex-spouse was entitled to the proceeds of the life insurance and pension plan. The court reasoned that the burden imposed on plan administrators to be familiar with local law which may alter the identity of the beneficiary was too great – administrators need to be able to pay the beneficiary specified in the plan documents.

Moral: Beneficiary designations on life insurance policies and retirement plans should be changed immediately when marital problems arise and no later than the time of divorce. Cases such as Emmens v. Johnson, 923 S.W.2d 705 (Tex. App.—Houston [1st Dist.] 1996, no writ), which applied the voiding statute to plans governed by ERISA, may no longer be used as authority that ERISA does not preempt these statutes.