The two children filed separate lawsuits against Ms. Egelhoff in Washington state courts, seeking to recover both the life insurance benefits and the pension benefits. The suit asserted a claim under a state law that provides that if a marriage is dissolved, a provision made prior to the dissolution relating to the payment of a decedent's interest in a nonprobate asset to the decedent's former spouse is revoked. The Washington Supreme Court affirmed that ruling, and Ms. Egelhoff took the case to the U.S. Supreme Court. The administrators must pay benefits to the beneficiaries chosen by state law, rather than to those identified in plan documents. In other words, this statute governs the payment of benefits, a central matter of plan administration.
Uniformity is impossible if plans are subject to different legal obligations in different states.
The Washington statute at issue poses precisely that threat. Plan administrators cannot make payments simply by identifying the beneficiary specified by the plan documents. Instead, they must familiarize themselves with state statutes so they can determine whether the named beneficiary's status has been 'revoked' by operation of law. In such a situation, administrators might find that plan payments are subject to conflicting legal obligations. In addition to employer contributions, the survey reports on employee payroll deductions for their benefits.