Retirement Blog

Finance Blogs » Retirement Blog » Ex loses right to pension benefits

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?


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.
June 11, 2013 at 5:37 pm

Sorry, I failed to mention that in addition to division of property award my unfaithful ex was also awarded at my full expense: Children's Medical & Dental, Child Support, and all travel expenses related to visitation. Two weeks before I retired she left the state of Georgia and went to Michigan. After a year battling in court for visitation rights I was finally awarded one weekend per month and half of all breaks from school that last more then three days. Problem is; how can I afford to travel if my ex was awarded everything?

June 11, 2013 at 5:28 pm

I feel that in most cases the law favors women without cause. There is definitely an unconstitutional prejudice toward men in divorce court.
Spousal Benefit Program (SBP) although its intentions are just should not be absolute. My ex-wife had an affair with a married service member and publicly admits it (even as a record of court). As a result of SBP a service member has two choices: stay with an unfaithful spouse and accept the situation or petition for divorce and give the unfaithful spouse an entire retirement (+/-$80).
When I first enlisted in 1989 a twenty year retirement was one of three incentives that I strived to obtain (the other two were GI Bill and Medical). This is something I began to formulate in high school before I ever met my ex-wife. How can a state divide an individually earned benefit approved by Congress? A state over ruling Congress is unconstitutional. SBP is in conflict with the true intent of a military retirement. 20 years is a long time to pursue a military retirement. 20 years is a long time to pursue "happiness"; a constitutional, inalienable right. It was not Congress' intent for military retirement to be property. The intent was to reward individuals for unselfish devotion to country. Key words: enlistment incentive and Congressional approval.
My retirement: Gross: $1,767
VA Waiver -$1.00
SBP Cost -$7.43

Spousal Division, Taxable: $883

My Division, Taxable:$875.57
FITW: -$69.26
SITW: -$65.00
Family Dental: -$119.37
NSLI: -$40.10
Child Support: -$500.00

My Net Pay: $81.84
Spouse Net Pay: $1,509.80

Retirement pay is really retention pay (at least up to 30 years). The retention pay is not all of the property received from military service. If pay is to be divided all property derived from military service should likewise be divided. Property such as: Retirement Colors, Presidential Letter, states approved veteran benefits, and GI Bill. These are all benefits of valor. If pay is going to be divided should not all property? And if property aside from pay is individually earned should not pay also be individually earned?

June 11, 2013 at 11:32 am

Looks like she has one of two choices, sue her divorce attorney or marry her divorce attorney.

June 10, 2013 at 2:56 pm

Get over it. If you never had it, or never paid for it yourself, you aren't missing it.

June 10, 2013 at 1:58 pm

The whole thing is one big shell game.The employee's union doesn't want to pay out to two different women. While the ex wife should be entitled to fair compensation for 30years of love and support in the marriage, the fact that it was nearly a decade later before she thought to file for any secondary benefits is on her.I have made legal mistakes early on in life and I learned from them. Hire an attorney as soon as possible is my motto.

June 10, 2013 at 12:57 am

I'm not a lawyer but I've been around them enough to know that without what they call a QDRA, or "quadra", short for the qualifying domestic relations order mentioned in the article, the wife in this case is out of luck legally. Her attorney dropped the ball, should have covered this for her.

June 08, 2013 at 2:56 pm

Why can't these golddigging ex wives get their own pensions and stop mooching off a man?

In this misandric society men in general have the civil rights and property rights of medieval Russian serfs in the corrupt family court racket.

It is past time to reform it !

June 08, 2013 at 10:20 am

The rights should have been transferred from the new spouse to the previous spouse, to the extent that the benefits were based on the pension plan contributions from the time of their marriage. Any additional plan value should go to the new spouse. The plan should not be required to double-pay.

June 07, 2013 at 3:51 pm

I think that if your with someone, and he or she dies then yes you get their pension. On the other hand, if you get divorced then you are giving up all ties to that person.. except children of course, and i feel that if you came back years after the divorce you just look greedy... and thats not always a positive aspect. Divorce = NO PENSION in my book. Thats especially if the other party with the pension gets remarried.

ELois P. Clayton
June 07, 2013 at 1:44 pm

My thoughts are, if a person had already wanted a divorce, because of the other's behavior, that person's wishes should NOT be DISregarded, especially if the person who has a ligitimate reason for the divorce, is keeping in contact with the courts and is NOT backing down from wanting the other to NOT receive finances meant for his/her children or another spouse.
Many appear, after divorce, attempting to claim money that they shouldn't be entitled to, because they were once married to that person.
In many cases, the one wanting the divorce, is wanting the divorce, because the trust is no longer there.
THEREFORE, it should be recognized, for who(in their right mind), wants to live or even be married to someone that they can't trust to leave their belonging unattended around.
They may as well leave their front door open and freely invite others in to steal.