Heggy v. American Trading Employee Retirement Account Plan, 56 S.W.3d 280 (Tex. App.—Houston [14th Dist.] 2001, no pet.).
Husband married Wife One and named her as the beneficiary of a
retirement account governed by ERISA. Husband subsequently divorced Wife
One and married Wife Two. He died without changing the beneficiary
designation on his retirement account. The lower court held that Wife
Two was entitled to the account.
The appellate court reversed. The court recognized the ERISA preempts
state law such as Fam. Code § 9.302 which automatically voids the
designation of an ex-spouse as the beneficiary of a retirement plan. The
court reviewed the split of authority among the circuits regarding
whether the provisions of ERISA or federal common law controls
designation of beneficiaries for plan benefits. The court concluded that
the United States Supreme Court case of Egelhoff v. Egelhoff, 532 U.S.
141 (2001), resolved the conflict by holding that state law provisions
altering the specified beneficiary upon divorce were preempted by ERISA.
The court expressly declined to follow the post-Egelhoff decision in
Weaver v. Keen, 43 S.W.3d 537 (Tex. App.—Waco 2001, no pet. h.), which
adopted an automatic voiding upon divorce approach as federal common
law.
Moral: Designations of beneficiaries on plans governed by ERISA should
be promptly changed upon divorce.