December 27th, 2017 •
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BE SURE TO TAKE CARE OF YOUR FINANCIAL AFFAIRS AFTER A DIVORCE
In the case of Manning v. Manning, the Court of Appeals dealt with the issue of the beneficiary of the deceased ex-husband’s retirement account when he failed to change the beneficiary after a divorce. In the Manning case, Mr. and Mrs. Manning were divorced. In the process of the divorce, they each entered into a Marital Dissolution Agreement (“MDA”). The MDA provided that:
Each party agrees to waive any interest he/she may have in the other party’s retirement. Wife agrees to waive any interest she may have in husband’s Eaton Vance Growth Fund, bank accounts, and Certificates of Deposit.
Each of the parties shall execute, acknowledge, and deliver any and all instruments and documents in writing which shall reasonably be required for purposes of effectuating provisions and intent of this MDA.
Mr. Manning died intestate a number of years after the parties signed the MDA. At that time, his former wife was still listed as the beneficiary of his 401(k) account. The administrator of Mr. Manning’s estate attempted to contact his former wife to obtain an authorization form directing the disbursement of the benefits from the retirement account be to Mr. Manning’s estate. The former wife refused to cooperate. The former wife asserted that Mr. Manning’s failure to remove her as a named beneficiary indicated his intent to gift the retirement benefits to her.
The Trial Court granted summary judgment to the former wife and the executor of Mr. Manning’s estate appealed.
The Court of Appeals reversed and specifically addressed the divestment of the former wife’s interest in the retirement account at issue. The Court of Appeals wrote that a MDA incorporated into a Final Decree of Divorce is a contract which is binding on the parties. The Court further wrote that once a contract is formed it cannot be modified without consent and additional consideration for the new terms. Although Mr. Manning failed to remove his former wife as the named beneficiary of his 401(k) account, his failure did not evidence an intent to modify the MDA when his former wife had continuing obligations to waive any rights she may have held in the 401(k) account and to execute any documents reasonably required for the purpose of effectuating the provisions in the MDA.
MY RECOMMENDATION: The moral of the story is to be diligent after a divorce and make the necessary changes in documents. Although the husband’s estate ultimately won the case, it was only after incurring the legal expense of a trial of the case and then an appeal.
Yours very truly,
RAINEY, KIZER, REVIERE & BELL, P.L.C.
William C. Bell, Jr., Attorney at Law