In Lubin v. AT&T Ret. Sav. Plan (2015 WL 4397703), an adoption was not given effect in determining who would receive the life insurance benefits at issue.

In this case, Austin Hardy participated in a Retirement Savings Plan (“Plan”), which included a life insurance benefit. At his death, he was survived by his sisters, Pauline Lubin and Frances Koryn (Plaintiffs), and his biological daughter, Jennifer Krokey. Although Krokey was Hardy’s biological child, she had been subsequently adopted by a step-father. Under Florida law, a child who is adopted is the child of the adopting parent and ceases to be a child of the biological parent for all purposes.

Hardy had not designated a beneficiary for his life insurance policy provided under the Plan. In reliance on the Plan’s default rules, it was determined that Krokey, as Hardy’s biological child, was entitled to receive the life insurance benefits under the Plan. Hardy’s sisters challenged the decision and filed this court action. The Plan moved for summary judgement, which the Court granted.

In the absence of a beneficiary designation, the terms of the Plan provided that the benefits were to be distributed to a surviving child or children, but if there were none, the benefits would go to a surviving sibling or siblings. The Plan further defines a “child” as a person related “by birth or by adoption and not through marriage.”

At issue is whether Krokey, who was adopted out of Hardy’s blood-line and therefore would not be treated as his child under Florida law, was nevertheless his surviving child under the Plan.

The sisters argued that the adoption of Krokey by her step-father caused her to cease being the child of Hardy for any purpose, making her ineligible to receive his benefits. The sisters asked the Court to interpret the language of the Plan to define a child as would be defined under applicable state law.

The Court rejected this argument, finding that it would require the Plan to add “unless the person related by birth was later adopted away from the plan participant” to the language of the Plan. The language in the Plan only excluded children related “through marriage.” The Court refused to interpret the definition of “child” as provided under Florida law, as in the Court’s view this would add to the Plan’s exclusionary language the further exclusion that Florida law would add.

Therefore, in this case the Court refused to apply its own state law to determine who would be considered a child of the decedent, and determined that the language of the Plan did not exclude Krokey. Therefore, distribution of the Plan’s life insurance benefits to Krokey was, in the Court’s view, correct.

Alex Fersa