Pension and Insurance Benefits Post-Nuptial Agreement Death of Spouse Prior to Final Judgment of Divorce
In Re: Estate of Easterday, deceased, PICS Case No. 17-1594 (Pa. Super. Oct. 3, 2017) Lazarus, J. (22 pages).
Insurance beneficiary designation was not statutorily invalidated due to the pendency of a divorce proceeding between the insured decedent and named beneficiary. Order of the orphans' court affirmed.
Colleen and Matthew Easterday cross-appealed from the order of the orphans' court adjudicating the rights of the parties regarding pension and insurance benefits payable upon the death of decedent Michael Easterday. Decedent died intestate, survived by three children, including cross-appellant Matthew, and his second wife, appellant Colleen. About a year prior to decedent's death, Colleen had initiated divorce proceedings against decedent. The parties ultimately executed a post-nuptial agreement in which the parties agreed to waive any rights in and to the pension and retirement plans of the other, and which agreement would remain in effect regardless of reconciliation, change in the parties' marital status, or entry of a final divorce decree.
Decedent died prior to the entry of a final divorce decree. At the time of death, Colleen remained the named beneficiary of decedent's pension and life insurance. Several days after decedent's death, Colleen withdrew the divorce action. Matthew, as administrator of decedent's estate, filed a petition to compel Colleen to preserve and turn over life insurance and pension benefits she had received, arguing that Colleen's and decedent's PNA controlled the disposition of the proceeds and required distribution to be made to the estate regardless of beneficiary designation, and that decedent's designation of Colleen as beneficiary became ineffective pursuant to statute. Colleen argued that the PNA did not control distribution of benefits because the parties did not change beneficiary designations, that the beneficiary designations were not statutorily ineffective because decedent's affidavit of consent was stale and invalid, and finally that the parties were in the process of reconciling at decedent's death and he intended Colleen remain the beneficiary.
The orphans' court granted the estate's petition in part and denied it in part, ruling that the estate was entitled to decedent's pension benefits, but not the insurance proceeds because they were not included in the PNA. On appeal, the estate argued that the orphans' court erred in proceeding under the legal fiction that there was no divorce proceedings at the time of decedent's death, and in not ruling that Colleen's designation as insurance beneficiary was statutorily invalidated. Colleen asserted that decedent made a conscious and deliberate choice to have her be the irrevocable beneficiary of his pension plan.
The court first ruled that Colleen was not permitted to unilaterally withdraw the divorce proceeding to elect to either proceed under the divorce code or PEF in her self-interest. Instead, the court noted that a surviving spouse was required to obtain the consent of the personal representative of the deceased spouse to withdraw a divorce action. However, the court ruled that decedent's stale affidavit of consent was not sufficient to establish ground for divorce, holding that the legislature intended to apply the same 30-day filing time limit since establishment of grounds for divorce became the functional equivalent of entry of final decree of divorce upon the death of one spouse. The court further held that the record was far from clear in establishing that decedent possessed an intent to divorce at his death, finding that decedent's failure to re-execute his affidavit evidenced an intent to delay or terminate the divorce proceedings. Thus, the court ruled that the insurance beneficiary designation was not statutorily invalidated.
Finally, the court rejected Colleen's cross-appeal, finding that the PNA was unequivocal regarding Colleen's waiver of her rights to decedent's pension.