Decisions of Interest

Although a widow was named as a beneficiary of her husband's retirement plan's death benefit, she was entitled to no part of the proceeds because the man had contracted with his ex-wife through a matrimonial settlement agreement to name only their two children as the irrevocable beneficiaries. Johnson v. N.Y. State and Local Retirement System, 2012 N. App. Div. LEXIS 1993 (4th Dept. 3/16/12) (Scudder, J.P., Fahey, Carni, Sconiers and Martoche, JJ.).

Plaintiff Wendy Johnson is the mother of two children. When she divorced their father in 1998, the couple's matrimonial settlement agreement, incorporated but not merged into the judgment of divorce, provided that each of them would name their two children the “joint irrevocable designated beneficiaries” of each of their retirement plans. Just before he executed the settlement agreement, however, the father (now deceased) named his then-girlfriend as a one-third beneficiary, with the children taking the remaining two-thirds share. Soon thereafter, he purportedly removed the children completely and designated his girlfriend as the sole beneficiary. He later married this girlfriend, but both he and she signed prenuptial agreements waiving all rights in each other's pensions and retirement plans. When the couple came close to divorce, they signed a separation agreement reiterating their waiver of all rights to each other's pensions and retirement funds. Despite these agreements, no change was made to the decedent's retirement plan death benefit designation. The couple reconciled and remained married until the decedent's death.

When the man died, the defendant New York State and Local Retirement System (System) notified his widow that the designation naming her as the sole beneficiary was invalid and that the System planned to disburse the death benefit in accordance with the decedent's March 1998 designation, which gave one third to each of the two children and to the widow.

Wendy Johnson brought this action to have her two children designated the sole irrevocable beneficiaries of the decedent's death benefit, in accordance with the settlement agreement. The decedent's widow also sought a ruling that her designation as sole beneficiary was valid. The lower court determined that the three-way split advocated by the System was the valid option.

The appeals court disagreed, stating, “The matrimonial settlement agreement clearly required decedent to name the children as the 'joint irrevocable designated beneficiaries' of his retirement plan death benefit. As a result of that agreement, decedent was without authority to name any other person as a partial or sole beneficiary of such death benefit.” The court found no basis for the widow's assertion that the parents' settlement agreement imposed the duty to name the children as sole beneficiaries merely as a guarantee that they meet their support obligations. In addition, it found that the decedent's widow had waived any rights in the death benefit when she signed the prenuptial and separation agreements, and that the reconciliation did not affect the validity of the separation agreement as, by its own terms, the agreement could be cancelled only through a writing.

Revocable Life Insurance Policy Brings Contempt
Finding

The Supreme Court erred in finding that an ex-husband was not guilty of contempt and had substantially complied with the provision in the parties' postnuptial agreement. The agreement required him to obtain a life insurance policy designating his ex-wife as an “irrevocable beneficiary.” Because a policy naming her simply as “beneficiary” is not substantially equivalent to the policy required by the agreement, and the alteration prejudiced the wife's position by making it possible for the ex-husband to cancel the policy without her permission, he should have been found guilty of contempt. Sutton v. Sutton , 2012 N.Y. App. Div. LEXIS 2083 (2d Dept. 3/20/12) (Skelos, J.P., Dickerson, Eng, Sgroi, JJ.).

Agreement Designating Irrevocable Beneficiary Voids Later Unilateral Change

Although a widow was named as a beneficiary of her husband's retirement plan's death benefit, she was entitled to no part of the proceeds because the man had contracted with his ex-wife through a matrimonial settlement agreement to name only their two children as the irrevocable beneficiaries. Johnson v. N.Y. State and Local Retirement System , 2012 N. App. Div. LEXIS 1993 (4th Dept. 3/16/12) (Scudder, J.P., Fahey, Carni, Sconiers and Martoche, JJ.).

Plaintiff Wendy Johnson is the mother of two children. When she divorced their father in 1998, the couple's matrimonial settlement agreement, incorporated but not merged into the judgment of divorce, provided that each of them would name their two children the “joint irrevocable designated beneficiaries” of each of their retirement plans. Just before he executed the settlement agreement, however, the father (now deceased) named his then-girlfriend as a one-third beneficiary, with the children taking the remaining two-thirds share. Soon thereafter, he purportedly removed the children completely and designated his girlfriend as the sole beneficiary. He later married this girlfriend, but both he and she signed prenuptial agreements waiving all rights in each other's pensions and retirement plans. When the couple came close to divorce, they signed a separation agreement reiterating their waiver of all rights to each other's pensions and retirement funds. Despite these agreements, no change was made to the decedent's retirement plan death benefit designation. The couple reconciled and remained married until the decedent's death.

When the man died, the defendant New York State and Local Retirement System (System) notified his widow that the designation naming her as the sole beneficiary was invalid and that the System planned to disburse the death benefit in accordance with the decedent's March 1998 designation, which gave one third to each of the two children and to the widow.

Wendy Johnson brought this action to have her two children designated the sole irrevocable beneficiaries of the decedent's death benefit, in accordance with the settlement agreement. The decedent's widow also sought a ruling that her designation as sole beneficiary was valid. The lower court determined that the three-way split advocated by the System was the valid option.

The appeals court disagreed, stating, “The matrimonial settlement agreement clearly required decedent to name the children as the 'joint irrevocable designated beneficiaries' of his retirement plan death benefit. As a result of that agreement, decedent was without authority to name any other person as a partial or sole beneficiary of such death benefit.” The court found no basis for the widow's assertion that the parents' settlement agreement imposed the duty to name the children as sole beneficiaries merely as a guarantee that they meet their support obligations. In addition, it found that the decedent's widow had waived any rights in the death benefit when she signed the prenuptial and separation agreements, and that the reconciliation did not affect the validity of the separation agreement as, by its own terms, the agreement could be cancelled only through a writing.