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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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May 13, 2013 at 9:49 am

First wife was a gold-digger and got was she deserved-nothing.

Kentucky Dave
May 10, 2013 at 4:03 pm

Patricia's Attorney had the professional duty and should have prepared the QDRO and had it entered in 1993 along with the Dissolution Decree. It really is hard to believe that lawyers in Minnesota aren't up on this by now or even in 1993. Her Lawyer, to my opinion, committed actionable malpractice. Now the question may be if she can recover from the divorce lawyer her serious damages. There are Statutes of Limitations to fight over now!

Ian Hargraves
May 09, 2013 at 5:38 pm

Karen, I doubt if she was willing to pay the court costs at all. The pension fund initiated the appeal and maybe I would have split the court costs which seem excessive anyway!

I am lucky I was divorced and one of my kids came with me and my son went to his mom. No payments either way!

May 09, 2013 at 3:02 pm

While we don't know all the details of their marriage based on the article I can say I think the first wife got what she wanted which was equality and didn't like it. She made her choices to marry or leave so why can't she work for her own pension just like he did. Pretty sure she wasn't laboring like he was.

Oh and for those who want to argue the point of she took care of the kids and house? That's BS, both adults in a marriage take care of the family and the house. If she decided to be a stay at home mom then she should understand that job doesn't come with a pension. Don't make that choice and then cry poverty when things don't work out, get a job like everyone else.

May 09, 2013 at 10:28 am

First wife needed to follow the rules in place. She did not file for benefits in a timely manner. A better lawyer up front would have filed. A better lawyer for her suit should have done better research and not gone to trial. Just because she might need the money isn't sufficient reason to pay her now. Looks like the legal system got it right.

May 09, 2013 at 12:35 am

Regarding the comment that, "First wife should get the benefits....first granted and contractually promised"...

Very old school. You girls are going to get exactly what you asked for "equality" - that means you and second wife are equal.

Nice to see these chickens finally coming home to roost..

May 07, 2013 at 7:00 pm

The only monetary compensation women should get after a divorce is child support. Greedy golddiggers want their cake and eat it to. Women fought hard to get equality in the workplace. They can get a job like anyone else.

May 06, 2013 at 11:27 pm

I understand that the pension was part of the divorce agreement, But I think if she was willing to shell out $55,000 on legal fees, she didn't really NEED money from his pension to support herself. there's something morally distasteful about starting a legal battle with your ex's grieving widow just because you think you're more entitled to his pension than she is. Even if you are legally supposed to receive it, why not take the high road, let his widow have his pension, and keep some of your dignity. Plus she would have saved $55,000.

first wife
May 06, 2013 at 9:21 pm

First wife should get the benefits....first granted and contractually promised.

May 06, 2013 at 8:14 pm

There are probably more facts to the Gary-Patricia divorce than are contained in the article, facts that would support why a judge would approve a dissolution agreement that provided for Patricia to receive 50% of Gary's pension. For example, maybe Gary and Patricia agreed to a 50/50 division of the pension benefits before they divorced. I'm divorced, and I know that divorces are typically very complicated. In any case, I think Joe D. hit the nail on the head. Based on the information in the article, it sounds like Patricia's divorce attorney failed to fully secure her interest in her ex's pension benefits, and it sounds like she may have grounds for a malpractice action against this attorney for something that he failed to do on her behalf in 1993. Good luck, Patricia.