I routinely handle life insurance beneficiary disputes. As I mentioned in a previous post, the first issue I analyze is whether the life insurance policy is governed by state law or by a federal law known as ERISA.
Many ERISA policy disputes involve claims by former spouses to life insurance benefits. Many states bar former spouses from receiving life insurance benefits if the designation was made prior to the divorce. But such state laws are generally superseded by ERISA. Often there is a claim that the former spouse waived their beneficiary status in the divorce decree. A state divorce decree judgment can supersede ERISA if the decree is a Qualified Domestic Relations Order (QDRO). To qualify as a QDRO, the decree generally should provide:
1) the name and the last known mailing address, if any, of the participant and the name and mailing address of each alternate payee covered by the order;
2) the amount of percentage of the participant’s benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined;
3) the number of payments or period to which such order applies, and
4) each plan to which such order applies.
Courts tend to interpret these requirements with varying degrees of strictness. Some take a strict view, while others take a more liberal view and look at whether the decree substantially complies with the ERISA QDRO requirements.
It is always important to consult with an attorney experienced in handling ERISA life insurance beneficiary disputes.