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Ex loses right to pension benefits

By Barbara Whelehan ·
Saturday, April 13, 2013
Posted: 6 am ET

I had dinner some time ago with friends and witnessed some friendly banter between a happily married couple. The husband teasingly threatened to trade his wife in for a newer model. "That would be a very costly decision on your part," was her rejoinder.

Divorce among couples in their 50s can be very expensive, indeed, particularly as it pertains to retirement planning. But those who choose this route should be sure to cross all their t's and dot their i's when they get a divorce decree, or they can lose some benefits to which they might otherwise be entitled.

Patricia Langston learned this lesson the hard way. As reported in earlier this week, the Minnesota Supreme Court ruled Langston wouldn't be entitled to surviving spouse benefits from her ex-husband's pension plan, though her 1993 divorce judgment and decree seemed to ensure that she would.

Splitting up fairly

When married couples split up, their marital assets are fair game to be split up as well. This might include the pension benefits of either party, but you have to follow the rules.

Pension benefits are protected by the Employee Retirement Security Act of 1974, or ERISA, a complex set of regulations designed to ensure that workplace retirement plans meet certain minimum standards. But it wasn't until 1984, when the Retirement Equity Act passed, that spousal protections were put into place.

First a bit of history in this case: According to court documents, Patricia and Gary Langston married in 1964 and nearly three decades later, divorced in 1993. Gary was a participant in the Twin Cities Carpenters and Joiners Pension Fund at the time. In 1993, Patricia was awarded half of all future pension payments, as well as survivors benefits. But the divorce decree wasn't enough to guarantee those benefits.

Years passed, Patricia's ex-husband married someone else and retired in 2004, at which point he chose a joint and 50 percent survivors benefit to be payable to his new bride.

Then in July 2005, well after Gary's retirement began and nearly a dozen years after their divorce, Patricia served a domestic relations order to the plan administrator to claim her share of the retirement benefits. The plan rejected the order, saying it didn't satisfy the requirements of a qualified domestic relations order under ERISA. The reason:  The pension benefits were already being paid out when Patricia got around to notifying the plan to cough up her share. She should have notified the plan before her ex began receiving pension checks.

A few months later, Gary Langston passed away, and Patricia's claim for joint and survivors benefits wound its way through the court system. The district court found in favor of Patricia. The plan administrator appealed, and the appellate court found in favor of the plan. Finally, the Minnesota Supreme Court reviewed the case and concurred with the appellate court. The reason: Surviving spouse benefits vest at the time a person retires. The plan cannot award benefits to two people (a spouse and an ex-spouse) because actuarially, it can't plan for such contingencies.

Bottom line: Patricia should have hired a knowledgeable attorney shortly after the divorce went into effect to put in place a qualified domestic relations order, as required by ERISA, that could stick. Because she waited too long, she lost the opportunity to get her share of her ex's pension benefits.

To add insult to injury, reimbursement for attorney fees incurred by Patricia, awarded by the district court, was denied by the court of appeals and then affirmed by the Minnesota Supreme Court. Patricia is out at least $55,692.50 in legal fees. Meanwhile, Gary's widow gets the goods.

What do you think? Should the plan have honored Patricia's divorce decree and granted her the pension benefits? Or should Gary's second wife be entitled to get them?


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Barbara Whelehan is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It is available at Amazon, Barnes & Noble, iBookstore and other e-book retailers.

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March 19, 2014 at 9:05 am

And I am aggressively going after everything I have been awarded. My husband tells our children I am ruining lives around me and his girlfriend hates me. That is too bad for them. It is important I survive financially and emotionally for our children and grandchildren. My husband has a new family and I am taking care of his old family.

March 19, 2014 at 9:00 am

This is absolutely atrocious. And an example of our society's dishonour of marriage and contracts. The husband knew exactly what he was doing and did not honour the divorce decree. The court, in this case, did not care. Terrible and awful.

Gloria C.Willis
March 10, 2014 at 6:11 pm

If a husband and wife get a divorce and the wife remarried 2 more times I do not beleive the wife should get half of the first husbands retirement,if she is still working and still married to her third husband...

Mary McGuire
February 26, 2014 at 12:40 pm

My ex husband remarried 13 years ago, at the time of our divorce, I told my lawyer he had a 10 year pension. he said he did not. We recently went back to court to stop alimony payments $75.00 week because of retirement age. Judge asked him if he was receiving any pension he said yes "a small one". He lied at the divorce proceedings. Was I entitled to half of retirement . We were married 36 years.

January 09, 2014 at 9:11 am

They should've cleared that as part of the divorce agreement. I did, and our agreement says each keeps their own 100%. That's how it should be, move along.

December 10, 2013 at 2:49 am

I think the xspouse is intitled to something. They should give her a certain percentage.

June 11, 2013 at 6:44 pm

this is new law a what i understand u divorce or whatever equal divided that i resources and a good lawyer take cases please
i have a kid support my was a big mess out . the suppose tell u
u no longer no more in the system is a military forger about
and the other is in u out i know that the law.