The Supreme Court decision (Kennedy v. Plan Administrator for DuPont Saving and Investment Plan). illustrates the importance of making sure your beneficiary designations are up-to-date. The Court unanimously ruled that an employer must give a deceased employee’s retirement benefits to his ex-wife even though she had renounced the benefits in their divorce. The employee worked for DuPont which had a retirement plan. When he was hired he named his wife as beneficiary of that plan. He later divorced and the wife agreed to give up her right to the plan benefits. But, the employee never filed a new beneficiary designation form. When he died, his ex-wife was given the benefits ($400,000) as she was the named beneficiary.
His other family members sued, claiming that the divorce decree should control, and the funds should go to the Estate and the rightful heirs. They won in District Court but the Supreme Court over-ruled that decision. In an opinion written by Justice David Souter, the Court held that according to the Employee Retirement and Income Security Act (ERISA), DuPont had to follow the instructions on the beneficiary form and distribute the retirement benefits to the ex-wife. The Court noted that the employee could have easily changed his beneficiary designation, but he did not follow through and do it.