We are in the process of divorce
and my husband said that he has name our children to be beneficiary for his retirement and life insurance, and he said according to the PA law that the ex-spouse cannot be beneficiary even ex-spouse is on the list.
However, the agreement for our property division we said that"
Both husband and wife agree naming each other of their two minor children’s guardian as beneficiaries before they reach the age of 18 years old. Each guardian should be named beneficiary to help ensure competent management of the proceeds for the children and each guardian will pass on the benefits from any life insurance, retirement plan, pension plan, social security or living will to their children when they reach the age of 18 years old."
So what's the solution for our case? Can we still name each other to be the beneficiary as our minor children’s guardian before they reach 18 years old.
Here is the quote from my husband, does that support what he said that we can't name ex-spouse as beneficiary as a guardian for our minor children:
If not ERISA - Pa. says this: 20 Pa. C.S.A. § 6111.2. Effect of divorce on designation of beneficiaries:
If a person domiciled in this Commonwealth at the time of his death is divorced from the bonds of matrimony after designating his spouse as beneficiary of a life insurance policy, annuity contract, pension or profit-sharing plan or other contractual arrangement providing for payments to his spouse, any designation in favor of his former spouse which was revocable by him after the divorce shall become ineffective for all purposes and shall be construed as if such former spouse had predeceased him unless it appears from the wording of the designation, a court order or a written contract between the person and such former spouse that the designation was intended to survive the divorce. Unless restrained by court order, no insurance company, pension or profit-sharing plan trustee or other obligor
shall be liable for making payments to a former spouse which would have been proper in the absence of this section. Any former spouse to whom payment is made shall be answerable to anyone prejudiced by the payment.
& even if ERISA plan - Pa. says this: In re: Estate of Sauthers, 971 A.2d 1265 (Pa. Super. Ct. 2009), the Pennsylvania Superior Court held that 20 Pa. C.S.A. § 6111.2 is not preempted by ERISA.
Divorce and effect on Beneficiary Designations in Pennsylvania
Posted by admin on October 16, 2012 in Blog | 0 comments
In the course of our trusts and estates practice in Pennsylvania, some questions from clients arise in relation to divorce law, particularly when death occurs with a either a husband and a wife in the process of a divorce or a husband and a wife who have obtained a decree in divorce from a Judge.
In one case, a decree in divorce was granted between a husband and wife who had minor children. Shortly after the divorce, the ex-husband died, however, his beneficiary designation on his $1 million life insurance policy still named the ex-wife as the primary beneficiary, and there was contingent beneficiary designation. Thus, the question was who is entitled to the life insurance proceeds given the situation?
In PA, 20 P.A. C.S. Section 6111.2 is applicable to this question which states:
Effect of divorce or pending divorce on designation of beneficiaries.
(A) General rule.–Any designation described in subsection (a)(2) in favor of the individual’s spouse or former spouse that was revocable by the individual at the individual’s death shall become ineffective for all purposes and shall be construed as if the spouse or former spouse had predeceased the individual, unless it appears the designation was intended to survive the divorce based on:
(1) the wording of the designation;
(2) a court order;
(3) a written contract between the individual and the spouse or former spouse; or
(4) a designation of a former spouse as a beneficiary after the divorce decree has been issued.
Applying the law in PA, the answer would be: the former wife is not the beneficiary of the life insurance proceeds, and because there was no contingent beneficiary designation, the proceeds pass to the ex-husband’s Estate. The ex-husband had no Will, therefore under the laws of intestacy of Pennsylvania, the ex-husband’s minor children, as beneficiaries of his intestate Estate, are the ultimate beneficiaries of the life insurance proceeds.