Background
William Kennedy named his wife Liv as beneficiary of his employer savings plan. Their 1994 divorce decree said she gave up any rights to his retirement benefits, but he never filed a new designation form. When he died, the plan paid her about $400,000. His estate sued.
What the Court held
The Court held that the divorce-decree waiver was not void under ERISA’s anti-alienation provision. But the plan administrator still acted correctly by paying Liv, because ERISA requires administrators to follow the plan documents, and the plan named her under its own designation procedures. A clear rule spares administrators from examining outside documents and deciding whether a waiver was knowing and voluntary. The Court expressly did not decide a slayer case or whether the estate could sue Liv directly after payment.
Why it matters for life insurance claims
Kennedy involved a savings plan, but the plan documents rule applies to employer group life insurance too. Before a death, the fix is simple: update the designation on the plan’s form. After a death, disputes over an outdated designation often turn on the plan’s terms and whether any claim can be brought against the person paid.
Read the opinion
Kennedy v. Plan Administrator for DuPont Sav. & Inv. Plan, 555 U.S. 285 (2009) (Justia). Related: Egelhoff v. Egelhoff.
Not legal advice. This page summarizes general rules and the specific statutes cited. Your policy's wording, the state whose law applies, and whether the coverage came through an employer can all change the result. See the disclaimer and editorial policy.