A 2001 Supreme Court holding that a woman who was named as the beneficiary of her former husband's 401(k) plan was entitled to inherit the money in the plan, even though state law said that the divorce had automatically revoked her right to inherit. As 401(k) plans are governed by federal law (ERISA), it pre-empted the state law that interfered with ERISA’s objectives.
David Egelhoff died two months following the divorce with his wife, Donna Egelhoff. While they were married, David designated Donna as the beneficiary of the life insurance policy and pension plan provided by his employer and governed by ERISA. Donna received the proceeds, but David’s children (from a different marriage) sued, claiming that a Washington state statute revoked Donna’s status as beneficiary because they divorced.
The Court ruled that ERISA, under which Donna was entitled to the proceeds, governed the distribution of the proceeds and pre-empted the Washington state statute. The Court focused on the language of ERISA, stating that it “shall supersede any and all State laws . . . relat[ing] to any employee benefit plan.” It also focused on one of the key objectives of ERISA, which is to have uniformity and standard procedures for administering ERISA plans, and that allowing states to interfere with the administration would hinder this objective.
See full opinion here.
[Last updated in November of 2020 by the Wex Definitions Team]