Maryland’s Court of Appeals, the highest Court in Maryland, found that a Separation Agreement giving the ex-wife rights to her ex-husband’s pension, trumped his own personal designation of his second wife as the beneficiary.
In this case the ex-wife had a separation agreement with her ex-husband, which was made part of their divorce order, giving her an interest in his pension. After his divorce, he remarried and named his new wife as beneficiary of his teacher’s pension. He died, and the ex-wife and new wife (now widow) were set up to fight over his pension.
(As an aside, this points out the dangers of poor estate planning. He set up a fight between his new wife and his ex-wife that she could not have won, and cost her a lot of money and grief in the process. If he had met with an attorney about his estate matters, and set it up properly before he died, he could have saved his widow a lot of hard times – and money!)
The court held that the ex-wife’s entitlement to the pension, as it was part of her divorce settlement, was greater than the new wife’s entitlement. The ex-wife did not have a Qualified Domestic Relations Order (QDRO) either, which is a Court Order that tells the pension to pay out a specific amount to the person designated. The Court ordered that a QDRO be prepared now, posthumously, to tell the pension provider to send the money to the ex-wife.
Additionally, during the time the Court was determining the issue the widow was receiving monies from the pension provider. She now has to pay the ex-wife back the monies she received – a whopping $17,000.00.
There was a distinction made by the Court because the husband worked for a school (a government entity). The Court had the ability to allow the Agreement to trump the beneficiary. If the ex-husband had worked for a private company, the agreement may not have done any good and the ex-wife would not be getting anything.
What is the lesson here? If you have an agreement that says you have rights to your ex-spouses retirement, be sure that you follow up with a QDRO and protect yourself. Also, be sure your agreement says that you have the right to be named the beneficiary for your portion and that the agreement says you can file a claim if those provisions are not followed.