Can Your Spouse Benefit From Your Pension if You’re Separated?

Estate planning can be quite complicated and at times prove somewhat difficult to make decisions. But when you add a legal separation or divorce into the mix, it can have a large impact on those previous decisions.

Under the California Probate Code, a surviving spouse does not have any inheritance rights so long as there is an order to terminate all marital (or registered domestic partnership) property rights. Essentially, if you die intestate (without a will) and you are legally separated from your spouse at the time of your death, your surviving spouse will not be able to inherit from you.

When Does the Code Apply?

However, the Code does not apply to all potential property issues after you die. It is important to remember that in situations regarding pension or retirement plans alternative laws govern many of these plans. These laws allow for their holders to designate a beneficiary separate from that of your trust. Unlike a trust that is covered by the Code, a legal separation or divorce may not affect these designations.

Appropriate Case Law

In an opinion published by the California Court of Appeals, the court discussed a case in which a deceased’s pension plan was administered and governed under the County Employees Retirement Law (CERL), a law which governs the benefits of retired workers in 20 of the state’s 58 counties. CERL allows for a surviving spouse to continue receiving a portion of the retiree’s monthly benefits for the rest of their life.

The case in question involved a man who retired in 1988 after working for Contra Costa County. He married his wife in 1994 and then separated from her 14 years later, though the two of them never sought a divorce. In 2013 they reached an agreement on the separation of their property. The husband was to retain ownership of his pension but agreed that his wife could remain a beneficiary of it, also intending for her to qualify as his “surviving spouse.”

The Board’s Finding

In 2014 the husband died, but the board that was responsible for administering his pension plan refused to treat his wife as the surviving spouse, arguing that she did not fit the definition of the phrase since there was a separation agreement already in place at the time of his passing.

The Court of Appeals’ Finding

However, the California Court of Appeals for the 1st District reversed that ruling, instead acknowledging a plain text interpretation of the phrase. Since she was alive after her husband had died, she was in fact to be considered the “surviving spouse.”

Although the Court of Appeals agreed that the law itself was ambiguous and contradicted some of the language of the Probate Code, it also compared the statute to a number of others in which a separated spouse was still held to be the surviving one.

The rules concerning designating specific beneficiaries for retirement and pension plans can vary by your county of employment, which is why it is recommended that you seek out a knowledgeable and experienced California estate planning attorney.

Posted in: Estate Planning