An ex-wife’s failure to obtain a Domestic Relations Order during her ex-husband’s lifetime did not bar relief after his death. The divorce settlement agreement provision that granted her the right to receive the ex-husband’s retirement plan death benefits could be enforced after his death more than seven years after the divorce judgment was entered.
Suchwas the holding of New York County Supreme Court Justice Debra A. James, in the August, 2013 decision in Paschall v. New York City Employees Retirement System.
After 20 years of marriage, Diana and Randy Paschall were divorced. Their 2004 divorce judgment incorporated the terms of their surviving 2003 Settlement Agreement.
By the time of his death in 2011, Mr. Paschall had married again to Jewel Paschall. Jewel was issued letters of administration for Randy’s estate. She also exercised her personal right of election to take her elective share of her late husband’s estate pursuant to New York Estates, Powers & Trust Law 5-1.1-A.
During his marriage to Diana, Mr. Paschall accrued benefits under the New York City Employees’ Retirement System (NYCERS). Diana and Randy’s divorce Settlement Agreement provided that in the event of Randy’s death before Diana, Diana would be entitled to Randy’s survivor annuity. The Agreement required Randy to designate Diana as his death benefit beneficiary.
Randy never designated Diana as his death benefit beneficiary. No Domestic Relations Order was ever entered by which Diana’s entitlement was ordered, nor was NYCERS otherwise notified of Diana’s entitlement before Randy’s death. Indeed, in 2009, Randy had designated his children as beneficiaries of his death benefit.
Here, Diana had sued Jewell and NYCERS, itself, seeking to enforce the Settlement Agreement insofar as it gave her rights to receive Randy’s retirement system death benefit.
Jewell moved to dismiss the complaint on the grounds that any rights that Diana had to Randy’s pension benefits under the Settlement Agreement did not confer upon Diana any rights to Randy’s death benefits. Moreover, Jewell claimed that pursuant to the Estates, Powers & Trust Law, Jewel, as surviving spouse, was entitled to the Randy’s pension death benefits.
NYCERS cross-moved for summary judgment dismissing the complaint. It argued that it was unable to make any distribution to Diana of Mr. Paschall’s pension benefits because she never obtained and presented a Domestic Relations Order (DRO) to NYCERS. It asserted that it must, therefore, pursuant to New York City Administrative Code (Administrative Code) § 13-148, pay the benefit to Mr. Paschall’s designated beneficiary; that payment to anyone other than a duly designated beneficiary or court-ordered beneficiary was prohibited by Administrative Code § 13-181, NYCERS’ anti-assignment statute.
Diana also cross-moved for judgment declaring her entitlement to the the death benefits.
Justice James held that Diana Paschall was entitled to receive 100% of the death benefit payable by NYCERS from the account of her deceased former husband.
The Court noted that because a Domestic Relations Order dividing retirement benefits is derived from the bargain struck by the parties at the time of the judgment of divorce, there is no need to commence a separate ‘action’ in order for the court to formalize the agreement between the parties and grant the DRO. Such a motion to enforce the parties’ agreement and the issuance of a DRO is not barred by the statute of limitations.
Contrary to NYCERS’ position in this matter, Justice James held that Diana’s failure to respond to NYCERS’s instructions to use the sample DRO provided to draft a DRO acceptable to NYCERS is not fatal to her entitlement to Randy’s decedent’s pension death benefits.
Justice James noted that the Court of Appeals in Kaplan v Kaplan, 82 NY2d 300, 604 N.Y.S.2d 519 (1993), held that a distribution of a pension death benefit does not contravene the anti-assignment statutes. Moreover, a former spouse may seek to enforce the settlement agreement directly against the pension plan administrator, rather than against the employee former spouse. Mr. Paschall’s failure to nominate his former wife as his beneficiary in accordance with the Settlement Agreement was of no consequence.
Accordingly, the motion of Diana Paschall for summary judgment declaring that she was entitled to be paid the death benefits earned by Randy Paschall with the New York City Employees’ Retirement System was granted.
The Court retained jurisdiction to implement and supervise the payment of the retirement death benefits if either party or the Plan Administrator made such application and the Court determined that such would be appropriate and necessary.