Wife Killer Not Entitled To Benefits

September 14, 2005 (PLANSPONSOR.com) - The US District Court for the Middle District of North Carolina ruled that a retirement plan administrator breached its fiduciary duty by paying benefits to a deceased participant's husband, indicted for killing his wife.

BNA reports that, in spite of being notified that Michael Peterson had been indicted for killing his wife Kathleen, the administrator of the three retirement plans for which she named him beneficiary had paid him nearly $400,000.   US District Judge Frank Bullock said the indictment “made it at least foreseeable” that Peterson would be convicted of murder, so payments should have been withheld.

Peterson’s wife died in 2001, and two weeks later Peterson was indicted for her murder.   BNA reports that the wife’s estate made a claim for benefits, but was told by the administrator that Peterson was the beneficiary and, absent a conviction, there was no legal justification for denying distribution of benefits to Michael, according to the court.  

The estate sued Nortel Networks, the plans, and the administrator under the Employee Retirement Income Security Act (ERISA), claiming it was an abuse of discretion for the benefits to be paid to Peterson.

According to BNA, the court brought up North Carolina’s “slayer statute” in its opinion, which says   a person convicted of killing is barred from acquiring any property or receiving any benefits resulting from the victim’s death.   The court determined that, “If a pending judicial determination could serve to bar a distribution to a particular beneficiary, it reasonably follows that there is a fiduciary responsibility to delay the distribution to that person until a judicial determination regarding the beneficiary’s ability to receive plan benefits had been made.”

Two years after his indictment, Peterson was convicted of his wife’s murder.

The case isAtwater v. Nortel Networks Inc., M.D.N.C., No. 1:04CV00503, 9/6/05.