Does the Ex-wife Get the Money?
COSSACK: In 1994, David Egelhoff died in an accident shortly after being divorced. With no will, his ex-wife received $46,000 as the listed beneficiary on his life insurance policy. Well, his children sued. But yesterday, the Supreme Court ruled in favor of the former wife. All right, Bill, tell me what happened. You represent Donna Egelhoff.</s>WILLIAM KILBERG, ATTY. FOR DONNA RAE EGELHOFF: Yes.</s>COSSACK: She was the wife, and then got divorced of the deceased gentleman.</s>KILBERG: Right.</s>COSSACK: And somehow, he apparently, either on purpose or whatever the reason was, never got around to taking her name off as the beneficiary.</s>KILBERG: Right.</s>COSSACK: She receives the money. The children sue.</s>KILBERG: The children from prior marriage sue. Donna Egelhoff was the beneficiary both of a life insurance policy and a pension plan, actually a 401(k) plan. And she remained the beneficiary prior to the divorce and after the divorce.</s>COSSACK: Now, how long were they divorced before the policy -- before these events took place?</s>KILBERG: They were divorced about four months. But the proceeding, the divorce proceeding went on for almost a year prior to that time.</s>COSSACK: Was there any other documents that he had changed to remove her name as beneficiaries...</s>KILBERG: No.</s>COSSACK: ... or was this -- these were just the only ones that he had just never done it.</s>KILBERG: He had not done it. Nor in the divorce proceeding, had they obtained that is called a qualified domestic relations order. That's an order which you can obtain, in a divorce proceeding, which would then be filed with your benefit plan, and could divide up the assets. You could give a portion of them to one beneficiary, a portion to another. you could change beneficiaries. But you'd have to do that pursuant to that order, which is actually a very, very simple document.</s>COSSACK: Wasn't done.</s>KILBERG: Wasn't done.</s>COSSACK: Laura, what about this? This is one of those states rights federal issue -- a state-versus-federal-government issue, isn't it? The question of whose law is better or supreme?</s>BRILL: Well, it is in a way, Roger. But it doesn't have the same implications as some of the constitutional questions that the Court's been grappling with recently. This case has to do with a federal statute that relates to employment retirement plans. And that statute specifically says that it is preempting state laws that are inconsistent with it. And I think this Washington statute was inconsistent, because the federal statute says whoever is listed on the plan documents gets the plan. And the husband hadn't changed his plan document. So it really helps employers to administer things in a simple way without having to look at all sorts of different state laws, and resolve inconsistencies.</s>COSSACK: OK, what's the rule that we take away from this, Richard? I mean, what have we been taught?</s>BERNSTEIN: Well, I think...</s>COSSACK: What advice do we have for divorced husbands and wives now?</s>BERNSTEIN: Well, get a lawyer and make sure you change your beneficiary, if that's what you really want to do. But ARISA is a problematic statute...</s>COSSACK: ARISA -- tell us what ARISA is?</s>BERNSTEIN: ARISA is a statue that deals with...</s>COSSACK: A federal statute.</s>KILBERG: A federal statute that deals with pension benefits. It was written 27 years ago. Parts of it are very confusing. Parts of it, such as the preemption provision, is very broad. And Congress hasn't revisited it in 27 years. And the Supreme Court has taken about 20 of these case, tiny little issues, because the lower courts disagree. And this is just another one of them.</s>COSSACK: Would you say that the ruling now, as it stands from the United States Supreme Court, is that documents that bare even an ex-wife's name -- and this is one is four months old, but it could have been four years -- is still going to be valid? What would happen, Bill, if, for example, in this situation, the husband would have remarried? Or wouldn't have been deceased? Would have remarried, for forgotten to take his wife?</s>KILBERG: If he had remarried, things would have been quite different, because ARISA has provisions that specifically deal with a marriage situation. In other words, he would have had to gotten the permission of his new wife to name someone other than his -- her.</s>COSSACK: All right, what would have happened if they would have been divorced four years, instead of four months?</s>KILBERG: Wouldn't have made any difference.</s>COSSACK: So the presumption is, as always now, or the laws, the United States Supreme Court is saying, stands now that whatever's on those papers, we are not going to go behind those papers?</s>KILBERG: Right. What the Supreme Court said in essence is that a state law, which tries to bind ARISA cover plans, life insurance plans, health insurance plans, pension plans, to specific rules, other than those set forth in ARISA itself or in the plan document, are invalid.</s>COSSACK: All right. That's all the time we have for today. If you got one thing out of BURDEN OF PROOF today, remember this: You'd better make sure that you have the right names and the right people as the beneficiaries on those documents. Or, they won't go to the right people. Thanks to our guests. Thank you for watching. Today on "</s>TALKBACK LIVE": A minister accused of presiding over the beatings of his children at his church is arrested in Atlanta. Send Bobbie Battista your e-mail and tune in at 3:00 p.m. Eastern time. We'll be back tomorrow with another edition of BURDEN OF PROOF. We'll see you then.