Ex-wife of Decedent Ordered to Turn Over 401(k) Proceeds to Decedent’s Estate

Divorce, death, and the 401(k) image.
In 2008, Brian Petronaci (“Brian”) and Laurie Voigt (“Laurie”) were married. They divorced in 2015, and Brian died three years later.

As part of their divorce, the couple entered into a marital settlement agreement (“MSA”) without the assistance of legal counsel. That MSA included a “Waiver of Employee… Retirement Benefits,” in which each spouse waived any right or claim to the other’s retirement benefits.

At the time that Brian died in 2018, Laurie was still listed as the beneficiary of Brian’s 401(k) retirement account, and the plan administrator distributed the proceeds (approximately $116,000) to Laurie. Brian’s parents, who were the co-administrators of his estate, then sued Laurie to recover those proceeds. In response, Laurie claimed that the federal Employee Retirement Income Security Act (“ERISA”) dictated that Laurie was the only one entitled to the 401(k) proceeds. She also claimed that she and Brian never intended Brian’s 401(k) to be included in the MSA waiver, that she and Brian were in the process of reconciling at the time of his death, and that Brian told her he wanted her to be the beneficiary of this asset before he died.

The judge considered the parties’ submissions and oral argument, and then granted Brian’s parents’ application, ordering Laurie to surrender the 401(k) proceeds. Laurie appealed.

The Appellate Division affirmed the trial court’s order. It found that the MSA waiver was unambiguous, and there was no evidence within that document to support Laurie’s claim that the waiver clause did not apply to Brian’s 401(k). Therefore, the court found the MSA waiver to be valid and enforceable. Because the MSA was clear and unambiguous, the court refused to look past the “plain meaning” of that document to consider extrinsic evidence regarding Brian’s intent or the couple’s alleged reconciliation.

The court also rejected Laurie’s claim that ERISA preempts New Jersey’s “revocation on divorce” statute, which states that a divorce revokes any revocable disposition of property. The court found that ERISA affects the plan administrator’s duty to release funds to a designated beneficiary, and that the 401(k) administrator properly distributed the funds to Laurie. However, ERISA did not prevent the estate from recovering those funds from Laurie, to enforce the MSA waiver. It quoted a Third Circuit opinion, which held that “permitting suits against beneficiaries after benefits have been paid does not implicate any . . . core objective of ERISA.”

A copy of In re Estate of Petronaci can be found here.