Retirement Blog

Finance Blogs » Retirement » Ex loses right to pension benefits

Ex loses right to pension benefits

By Barbara Whelehan · Bankrate.com
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 Plansponsor.com 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?

***

Follow me on Twitter: BWhelehan.

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.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
208 Comments
Shar
April 29, 2013 at 7:38 pm

The ex should get half of her ex-husbands pension that has accrued from the day they are married until the day they are divorced. After that, his half and what he accrues after that would go to himself and\or new wife. Yes, the ex should have gotten something from being married to him. That's what would be fair.

Terry
April 29, 2013 at 5:08 pm

I don't think a person should give up a single penney of their pension to any spouse. I think the individual should get what they earn from their employer and then do with it as they alone see fit not some legal system. I know a woman who receives 3 retirement checks from ex-husbands who were all military. She even stated that it was the best retirement plan she could come up with. You should leave the marriage with what you entered it with. NOTHING!!! And oh by the way inheritance CANNOT be issues to an ex...

bob Reyn
April 29, 2013 at 2:42 pm

I've seen so many times the wife moves out to be with her lover, ually a bum who lives off them he's with. Csll me cruel but, A divorced man should not have to support the ex and her lover
let me also say "You don't want me, you dont want me?you dont need my money. Although California has a differnt view. In California, they give the ex almost everything you own and make.

rob
April 29, 2013 at 2:39 pm

The exs accrued benefit should cease at the time of the split and the new wife's benefit should start.

bob Reyn
April 29, 2013 at 2:31 pm

personally i believe that a woman who doesn't want anything to do with her husband and wants a divorce, she shouldn't expect to be supported in the way she was when marrie simply said, want a new man, fine let him support

rnixon
April 29, 2013 at 1:33 pm

Personally, i think that when you divorce, your pension should be divorced from your ex.If your ex doesn't have their own pension, that's just too bad.

KP
April 27, 2013 at 3:06 pm

The trick is to out live your ex wife.

Carmen Frazier
April 27, 2013 at 11:09 am

No because the law honors the QDRO not the divorce decree. This all is usually done with dividing things obtained throughout the marriage. Knowledgeable and good lawyers charge but normally ask you questions and bring this to your attention. Through courts and resource centers, your own research and know how, you can leave the lawyer out and handle your own business. But you have to do your own leg work with research, filing papers and all. I saved $2,500.00 doing my own.

John
April 26, 2013 at 8:50 pm

I think it's funny that the ex didn't get any of the mans pension. I sure as hell wouldn't want my ex wife to get any of my pension. However she can't get mine because we've been divorced for 37 years and I didn't even have a pension then ha ha. But my current wife of 33 years will get all I got coming.

J.P.
April 26, 2013 at 8:12 pm

I agree with David Wade . Also they aren't many Companys that have a pension for women where ever they work . I know my Husband worked till he was 73 and for four different Companys and not one had a pension plan. So we all aren't so lucky .I some what agree with Gail also .It should have been split .