401(k) Benefits Properly Paid to Ex-Wife

A federal judge in Massachusetts has rejected claims that a deceased 401(k) participant’s plan balance should have been paid to his estate instead of to his ex-wife, who was the named beneficiary on the account.
U.S. Magistrate Judge Kenneth P. Neiman of the U.S. District Court for the District of Massachusetts ruled that Nadine Staelens properly deserved ex-husband Aaron’s 401(k) benefits because she had not explicitly given up her rights to the money when the couple divorced in 2004 after 15 years of marriage.

In his ruling, Neiman pointed out that the Staelens’ divorce order provided that each would keep their own pension benefits and that Aaron Staelens would keep the right to control who would get his benefits at his death. Aaron Staelens had designated his wife as beneficiary while they were married; not only did not change it after the divorce, he told his employer that he wanted to keep his ex-wife as beneficiary, according to the court.

After Aaron Staelens died in 2008 and the employer paid the account balance to the ex-wife, Aaron Staelens’ mother sued the ex-wife, saying Nadine Staelens had given up her right to get the money and that it should have been paid to the ex-husband’s estate.

In reaching the ruling, Neiman said he relied on the 2009 U.S. Supreme Court ruling in Kennedy for Plan Administrator for DuPont Savings & Investment Plan. In that case, the high court upheld a plan’s benefits payment to a participant’s ex-wife despite the ex-wife having given up her rights to the money. The plan properly relied on the participant’s beneficiary designation, the justices decided (see “Case Sensitive: Estate Planning”).

The Massachusetts case is Staelens v. Staelens, D. Mass., No. 08-30159-KPN.