On January 26, 2009, the United States Supreme Court issued a unanimous opinion in Kennedy v. Plan Administrator for the DuPont Savings & Investment Plan, No. 07-636. This case generated significant interest because it promised to resolve the oft-arising dilemma plan administrators and sponsors face when they encounter a now-deceased plan participant failed to remove his or her ex-spouse as a named beneficiary of a pension or life insurance benefit, despite the fact that the ex-spouse had waived all rights to  the benefit in the divorce. Adding further interest was the unusual fact that the Court initially granted certiorari only on the question of whether the spousal waiver was an unlawful assignment or alienation under ERISA, but during oral argument, decided that the real question was whether the plan document would control (an issue that the appellants had raised but the Court had rejected as a basis for its review).

As might be expected from this convoluted history, the Courts decision turned on the plan document question. But in the process, the Court also resolved significantquestions with respect to waivers and disclaimers of benefits. Simply put, the Court held that because ERISA requires plan administrators to follow the terms of lawful plan documents, no divorce decree (other than a properly-drafted qualified domestic relations order – “QDRO”) can override the specific terms of the plan.

Accordingly, where a benefit plan has a specified procedure for designating beneficiaries and for revoking or replacing a beneficiary designation, the plan administrators must follow those plan procedures, despite the fact that the designated beneficiary has waived those same benefits in the divorce decree.

Notwithstanding this general rule, the Court also held that the designated beneficiary has the right (just as under traditional trust law) to disclaim his or her interest in the benefit, at least where the plan provides for such a disclaimer.



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