U.S. District Judge John R. Tunheim of the U.S District Court for the District of Minnesota issued the ruling that rejected claims the participant’s beneficiary designation should not be honored because the participant was incompetent at the time.Tunheim ruled that stepdaughter Tracy Marks did not exert improper influence over James Marier when he executed the beneficiary designation naming Marks in 2001 and 2002.
Because the Employee Retirement Income Security Act (ERISA) is silent on the issues of incompetence and undue influence in beneficiary designations, Tunheim said he would need to look to applicable federal common law standards. According to the court, under federal common law, Irwin Bank, trustee for the estate of Marier’s mother, had to prove by a preponderance of the evidence that Marier was incompetent at the time of his 2002 beneficiary designation.
Tunheim found that Irwin Bank had not satisfied its preponderance-of-the-evidence burden.
According to the ruling, Marier was married to Marks’ mother for 12 years and developed a close relationship with Marks. In September 2002, Marier named Marks as his primary beneficiary.
When Marier died in September 2003, the plan administrator notified Irwin Bank that Marier’s mother was the beneficiary based on an earlier beneficiary designation. The administrator later froze the account when Marks made a claim that she was the proper beneficiary according to Marier’s 2002 beneficiary designation form.
The case is Alliant Techsystems Inc. v. Marks,D. Minn., No. 04-3539 (JRT/FLN), 3/31/08.