A recent decision by the U.S. Court of Appeals for the Eighth Circuit demonstrates the potential limitations of prenuptial agreements purporting to waive spousal rights to pension benefits, even when re-executed after a marriage has occurred and presented to a plan administrator. The couple in this case had been married and divorced from each other twice before they embarked on their third attempt at a successful marriage. Chastened, perhaps, by their previous marital failures, the couple executed a prenuptial agreement both before and after their third wedding. Under the agreement, the wife waived her rights to the husband’s 401(k) plan account with his employer. The husband had previously designated his parents as beneficiaries of the account. Less than two years after their marriage, the couple had already begun the process of obtaining their third divorce when the husband died. Both the surviving wife and the parents filed a claim to the husband’s 401(k) account, ultimately sending the dispute to the courts. The parents argued that their daughter-in-law had waived her spousal rights to the benefits when she signed the prenuptial agreement, giving them the right to the account as the designated beneficiaries. An Iowa district court disagreed, ruling that the prenuptial agreement was not an effective waiver of the wife’s survivor rights because it did not satisfy the acknowledgment requirement of ERISA.
The appeals court agreed, finding the prenuptial agreement failed to inform the wife in clear and express terms that she both had a spousal right to receive the funds in her husband’s 401(k) account and that she was waiving this right. Rather, the language in the agreement seemed to contemplate the future execution of a waiver. Because the prenuptial agreement failed to make it clear that, by executing the waiver in the document, the wife would not receive the funds to which she would otherwise be entitled, the court found that the prenuptial agreement failed to comply with the consent requirements of ERISA. As a result, the rights of the wife as surviving spouse prevailed over the designation of the parents as beneficiaries. (MidAmerican Pension and Employee Benefits Plans Administrative Committee v. Cox, 8th Cir. 2013)