A couple entered into a separation agreement, which was later incorporated into a divorce decree, in which they agreed to maintain any employer-related life insurance policies for the benefit of their minor child until she turned 18 or graduated from high school. At the time, the father had an employer-sponsored life insurance policy through Sun Life that listed his uncle as the sole beneficiary. The father died without changing the designated beneficiary to his daughter. After his death, but before payment of the life insurance benefits, the daughter’s attorney provided Sun Life with a copy of the divorce decree and separation agreement. Nevertheless, Sun Life paid the benefits to the deceased father’s uncle, and the daughter then sued Sun Life for failing to follow the terms of a qualified domestic relations order (“QDRO”).
A federal district court originally held that the daughter was entitled to the life insurance benefits, and the U.S. Court of Appeals for the Sixth Circuit affirmed that decision. The Sixth Circuit determined that the divorce decree satisfied each of the requirements under ERISA to be a valid QDRO, even though it applied to a life insurance benefit. Notably, the Sixth Circuit held that the order satisfied the requirement to clearly specify each plan to which the order applies, despite the fact that it did not expressly name any plans. The separation agreement specified “all employer provided life insurance, now in existence at a reasonable cost, or later acquired at a reasonable cost.” The Sixth Circuit explained that “all” means “all” and thus, the plans were “clearly specified.” The Sixth Circuit also upheld the validity of a posthumous QDRO.
Sun Life Assurance Co. of Canada v. Jackson, No. 17-3120 (6th Cir. Dec, 13, 2017).