Opinion ID: 2497361
Heading Depth: 1
Heading Rank: 4

Heading: District Court of Appeal Cases and the Conflict Issue

Text: The district courts of appeal have extended the reasoning of Cooper II to beneficiary-designated policies, plans, and accounts other than life insurance policies. See Smith v. Smith, 919 So.2d 525 (Fla. 5th DCA 2005) (individual retirement account (IRA) and annuity accounts); Luszcz v. Lavoie, 787 So.2d 245 (Fla. 2d DCA 2001) (IRA); In re Estate of Dellinger, 760 So.2d 1016 (Fla. 4th DCA 2000) (IRA); Waller v. Pope, 715 So.2d 958 (Fla. 2d DCA 1998) (employee pension plan and credit union account). This is a logical extension of the rule announced in Cooper II, because an IRA, an annuity account, and an employee pension plan are analogous to a life insurance policy in that the owner of the policy or plan has to take specific steps to designate a beneficiary and death benefits pass directly to a beneficiary rather than going through probate. As explained by the Second District, sitting en banc and receding from a previous case that held to the contrary: An IRA is a contract with an institution that involves a third-party beneficiary designation. The rights of a spouse who has been named a beneficiary of an IRA arise from that contract, not from the marital relationship. Further, a beneficiary's rights to proceeds do not attach until the IRA owner's death. Until then, the beneficiary merely has an expectancy in the IRA because until the owner's death, the owner can do with the IRA as desired, including changing the beneficiary designation or cashing out the account altogether. Luszcz, 787 So.2d at 248. [4] We conclude that this reasoning extends to the deferred compensation fund at issue in this case. The application of Cooper II is straightforward when the settlement agreement makes no mention of the disputed plan or policy, but rather contains language such as a general release. This is directly analogous to this Court's decision in Cooper II, where the settlement agreement contained no mention of the life insurance policy, but rather only general releases. In such a situation, under Cooper II, the owner of the policy can designate whomever he or she wishes as the beneficiary, and the beneficiary designation controls. See, e.g., In re Estate of Dellinger, 760 So.2d at 1017; Waller, 715 So.2d at 960. However, when the settlement agreement mentions the disputed policy or plan, the question then becomes whether the language in the settlement agreement is specific enough to override the predissolution beneficiary designation. We now turn to a discussion of two district court of appeal cases addressing such a situationthe Fifth District in Smith and the Second District in Luszcz. The Fifth and Second Districts came to a conclusion opposite to that of the Third District below. In Smith, the Fifth District considered the effect of a settlement agreement that identified the insurance policies in dispute, as well as various retirement plans. 919 So.2d at 527. With regard to these policies and plans, the agreement stated: Husband shall receive as his own and Wife shall have no further rights or responsibilities regarding these assets. Id. At the time of the divorce, the wife was listed as the beneficiary of the policies and plans. Id. The settlement agreement also contained a general release of claims. Id. About one and one-half years after the dissolution of marriage, the husband died without having changed the beneficiary on the policies and retirement plans. Id. The wife and the husband's estate both made claims to the funds generated by the policies and plans. Id. The trial court held that the settlement agreement acted as a waiver of any right the former wife had to the disputed funds. Id. On appeal, the Fifth District referred to Cooper II, stating: The Florida Supreme Court affirmed, saying that a contrary holding would put insurance companies in an impossible position. Cooper v. Muccitelli, 682 So.2d 77, 79 (Fla.1996) ( Cooper II ). The high court pointed out that despite specific and clearly worded language in an insurance contract, a carrier could never be certain to whom to pay the proceeds. The lesson from Cooper I and Cooper II is that while it may be possible in a marital settlement agreement to waive one's right as a beneficiary of insurance policies, that waiver can only be accomplished if the waiving party specifically gives up his or her rights to the proceeds of these policies.[n.1] Otherwise, one must look only to the beneficiary designation made by the insured and filed with the insurer. [n.1] Obviously, some other language such as death benefits would likely suffice. Id. at 527-28. With respect to the life insurance proceeds, the Fifth District held that the settlement agreement failed to make specific reference to the proceeds of the insurance policies and, therefore, the wife, as the listed beneficiary, was entitled to the proceeds. Id. at 528. As to the retirement plans, the Fifth District concluded that [t]he same result obtains with respect to IRA and retirement plan proceeds, as well. Id. The Fifth District held: Once again, the marital settlement agreement did not mention a disposition of the proceeds of the plans and accounts, and the decedent never changed the beneficiary designations. Under these circumstances, courts need look no further than the plain language of the policy to determine who the decedent intended as beneficiary of the proceeds. Id. The Second District has also addressed the situation where the settlement agreement specifically mentioned the disputed account; however, in that case the agreement divided the IRA between the husband and wife. Luszcz, 787 So.2d at 248. The marital settlement agreement in Luszcz provided that the ex-wife's IRA would be divided, with the ex-husband receiving $11,165 and the wife receiving $31,835 of the IRA. Id. at 246-47. The settlement agreement did not include releases of claims by either spouse against the other. Id. at 246. Prior to the divorce, the husband had been designated as the beneficiary of the wife's account. Eight months after the final judgment of dissolution of marriage was entered, she died without changing the beneficiary on her portion of the IRA. Id. In holding that the ex-husband was entitled to the death benefits of the ex-wife's portion of the IRA as the listed beneficiary, the Second District examined Cooper II and determined that Cooper II should be applied to IRAs as well: [A] beneficiary's rights to proceeds do not attach until the IRA owner's death. Until then, the beneficiary merely has an expectancy in the IRA because until the owner's death, the owner can do with the IRA as desired, including changing the beneficiary designation or cashing out the account altogether. See Waller v. Pope, 715 So.2d 958 (Fla. 2d DCA 1998); Cooper, 661 So.2d 52. Upon the IRA owner's death, however, the beneficiary's expectancy becomes an interest that attaches to the proceeds of the IRA, and those proceeds pass directly to the beneficiary; they do not pass through the estate. See Waller, 715 So.2d 958; Cooper, 661 So.2d 52. See also Graves v. Summit Bank, 541 N.E.2d 974 (Ind.Ct.App.1989). Luszcz, 787 So.2d at 248. The Second District concluded that [u]nless the dissolution judgment requires a spouse to name a particular beneficiary as a condition of a dissolution of marriage, the owner of the IRA is free to name whomever desired as the beneficiary. Id. Therefore, [u]pon the IRA owner's death, the institution need look no further than the IRA contract to determine the beneficiary. Id. The Second District reasoned: Otherwise, as pointed out by the supreme court in Cooper, the institution could never be certain whom to pay and would nearly always have to resort to going to court. In the end, it is the IRA owner's responsibility to change the beneficiary designation if a change is desired. Some marriages do end amicably and with a spouse desiring to maintain an ex-spouse as a beneficiary. Id. (footnote omitted). As discussed above, both the Fifth and Second Districts have held, albeit with differing reasoning, that when a marital settlement agreement mentions the disputed policy or plan, but does not specifically mention who should receive the death benefits ( Smith ) or does not require a spouse to name a particular beneficiary as a condition of dissolution of marriage ( Luszcz ), the reviewing court should look no further than the named beneficiary. These conclusions follow because, as explained in both opinions, the owner of the policy, plan, or account is free to designate whomever he or she chooses as the beneficiary. Smith, 919 So.2d at 529-30 ([U]ntil the owner's death, the owner can do with the [account] as desired, including changing the beneficiary designation or cashing out the account all together. (quoting Luszcz, 787 So.2d at 248)); Luszcz, 787 So.2d at 248 (Unless the dissolution judgment requires a spouse to name a particular beneficiary as a condition of a dissolution of marriage, the owner of the IRA is free to name whomever desired as the beneficiary.). Therefore, absent a change in the designation following the dissolution of marriage, the previous designation controls. In contrast, the Third District would require that the owner reaffirm his or her designation of the spouse after the dissolution of marriage. The Third District held that language referring to Manuel Crawford retain[ing] retirement money with the deferred compensation fund was sufficient to waive the former husband's pre-dissolution designation of the former wife as a beneficiary, Barker, 16 So.3d at 901, and that the fact that Manuel Crawford did not reaffirm Linda Crawford as the beneficiary of this account confirms his intent that he was the beneficiary of this fund and that the money from the fund remained his at all times following the dissolution. Id. at 902 (quoting magistrate's report).