Spouse not Informed of Effect of Beneficiary Waiver

February 24, 2006 (PLANSPONSOR.com) - The US District Court for the Northern District of California has ruled that a deceased participant's beneficiary designation form was invalid, even though his spouse had signed consent to name his children as beneficiaries.

EBIA reports that, because the form did not include any acknowledgement by the spouse of the effect of the election to consent to a non-spouse beneficiary as required by the Employee Retirement Income Security Act (ERISA), the designation of his children as beneficiaries was invalid.  

The form merely stated that if the participant was married and wished to designate someone other than the participant’s spouse, the spouse must sign the form.   It gave no explanation of the right the spouse was giving up, though that was a requirement by the plan, according to the EBIA report.

In addition the court ruled that the signature was not witnessed by a notary or a plan representative, also required by the plan (and ERISA), and the form was “likely” invalid for that reason as well.

The case is Sun Microsystems, Inc. v. Lema, No. C 04-04968 JF (N.D. Cal. Feb. 2, 2006).